Acknowledging our Cultural Mosaic

Our experiences with philanthropy are very often based on the culture in which we grew up.  In some cultures, the concept of sharing wealth is common and expected; in others it may be a foreign concept.

Last week, I conducted a workshop for a large financial institution for the wealth managers who deal with high net worth individuals.  As part of the workshop we explored each advisor’s personal memories of philanthropy.  Some advisors shared stories about how they and their children had personally donated hampers to families in need and others shared how they had supported a cause that had affected a family member and how they experienced the rewards of witnessing the impact of their donation. 

One advisor described how charity and philanthropy had been foreign concepts to her.  Growing up in a formerly communist country in Europe, the State was responsible for taking care of social needs and citizens did not think to support these personally. Another advisor explained that individuals from Communist Mainland China, with whom he had raised the idea of using some of their wealth for community, had rejected this outright. They had worked very hard to go from rags to riches and sharing their wealth was alien to them. 

These insights were very helpful for the whole group to consider. We discussed how we might still raise the opportunities that philanthropy offers even in these situations.  It was suggested that advisors could share examples of other clients who were in similar circumstances and how they had used philanthropy as a means to engage in financial literacy as a family and to use money beyond the self; or could describe the satisfaction that another entrepreneur and family was experiencing engaging in strategic philanthropy.   We discussed how to share these examples in a way that was not threatening or judgmental, framed as a possible solution to an issue, so that the clients could choose to learn more and feel in control. 

We acknowledged that often clients rejected philanthropy and other ideas without knowing what they could offer.  We agreed that it was still important to raise these ideas with clients and explore all their interests, financial, relational and emotional, in order to provide them with a full array of opportunities and solutions to address all their needs in a holistic way.  We also discussed the importance of timing and how we could gently refer to the issue of philanthropy only to come back to it at another time that might be better for the client.  Additionally, we reflected upon the fact that for those who find philanthropy an unfamiliar concept, they might be more disposed to considering a contribution to a charity that had significantly affected them or a family member personally so that they would see personal relevance.  In some cases, these contributions could also give the donor stature in their new community.  And in every case, we needed to be patient and to listen closely to clients. 

Recognizing the different backgrounds and experiences in the room, both personal and of our clients, was itself very therapeutic.  It allowed everyone to share their discomfort and challenges and once aired these experiences not only provided insights into different perspectives, but also allowed us to develop a more sensitive approach to raising philanthropy. 

Canada is often described as a cultural mosaic rather than a melting-pot; we are a rich nation where cultural differences are acknowledged and celebrated.  So too with philanthropy, it is important to recognize the cultural backgrounds that shape our and our clients’ perspectives and to adapt our approaches to address those differences.
   

As a philanthropy advisor, I work with families and individuals to create and facilitate a safe and productive environment to articulate values, interests and goals.   Together we develop and implement a plan to make giving meaningful, satisfying and effective. 

For more information on how I work with clients to assist them to give with heart and for impact please visit the approach and services pages on my website.

Start with the Why

Have you heard of the popular motivational speaker, Simon Sinek?

He’s the visionary thinker, marketing and leadership consultant - and Ted Talk speaker - who is leading a movement to inspire people to do things that inspire them. 

He now markets an online course to assist folks to discover their personal why - Start with the Why.   The course takes participants through exercises to explore the purpose, cause or belief that motivates and inspires them.  Coming out of the course, participants will have ascertained and described the contribution they will make towards an articulated desired impact.  

Sinek frames this as a tool to help folks to be inspired by their vocation.    In fact, this process is very similar to the one used when determining how to be an engaged, effective and fulfilled philanthropist. Just like identifying a career path, when creating a plan for philanthropy, it is important to articulate how you wish to see the world through your contribution – your desired impact.

A couple, I will refer to as Sylvia and Ken, have both been very successful in their respective careers.   They are now retired in their 70’s and have children and grandchildren in whose lives they are involved.  They have always been active in their community as leaders in a variety of organizations.   With more time on their hands now, they have identified a number of causes that have meaning to them and have shared their time, treasure and talent to seed fund a number of projects and programs which would not have happened without their support.  They have felt engaged by these projects and speak glowingly about the activities that have taken place because of their contributions. 

Now, as their actions are playing out, we are referring back to their desired impact – the condition in which they wish to see the world.  We are checking in with the organizations carrying out the activities to ask questions about how the programs are actually making change in the world.  For example, are there more women accessing and using the health services designed for their needs and is this improving the well-being of them and their children? And how is this being measured?  In each case, identifying desired outcomes at the beginning is helping to formulate the questions to assess impact. 

As with all we do, articulating a goal provides us with focus and a means to identify success. 

Simon Sinek aptly describes the benefits of a “Why Statement”:

“A Why Statement is one sentence that captures your unique contribution and impact. The contribution is the real actionable part of your Why. The impact is the condition you wish to leave the people and world around you. Together, these two components provide fulfillment for you and those you serve.”

Philanthropy done thoughtfully and strategically provides meaning and satisfaction for you and those in the community you support. 

As a philanthropy advisor, I work with families and individuals to create and facilitate a safe and productive environment to articulate values, interests and goals.   Together we develop, implement and monitor a plan to make giving meaningful, satisfying and effective. 

For more information on how I work with clients to assist them to give with heart and for impact please visit the approach and services pages on my website.

Curiosity and Philanthropy

I recently participated in a very good estate planning seminar for advisors put on by ZLC Financial entitled Strategic Planning for the Private Business Owner.  There were some excellent sessions on Dealing with CRA, Planning for Tax and Taxation Issues Affecting Small Business, Positioning a Private Business for Sale, as well as sessions on using Insurance and Employee Benefits.    Attendees were busily taking notes on all these technical topics to ensure that they were on top of the very best information to serve their clients.  Everyone in the room seemed to be a skilled and savvy technician – and we all know that is very important. 

Yet, when I facilitated my session on “Empowering Philanthropy” we all acknowledged that what really sets an advisor apart from other knowledgeable advisors, is not the technical prowess – it’s the relationship that the advisor has with his or her clients. Without a strong relationship, clients can very easily just change an advisor. 

I shared the story of John, who year after year was named the top performer at the President’s Club event held for his financial services industry.  When John was asked why he significantly out-performed his colleagues year after year, he explained that what sets him apart is that he is “naturally a very curious person“ and “loves learning about people”.   He likes learning about his clients and their families and his clients like this about him and tell their friends about him.  (This story comes from the book “Your Client’s Story” by Scott West and Mitch Anthony, Insight Press, 2005.)

With this in mind, we explored how to more deeply engage with clients to discover their stories, motivations and values around money – and to assist them to involve their families in these conversations.  Philanthropy is a wonderful framework for these discussions. 

Many clients have resources that will both support them during their lifetime and provide a tidy inheritance for family at a level which will still encourage children to be productive.  There is often a portion of one’s estate that could be used to benefit community (especially in light of the fact that there will be taxes payable upon death and charitable donations can divert a portion of those taxes to social causes of importance to the client). 

For those clients with significant wealth, engaging in philanthropy as a family is a fabulous means of openly talking money about and experiencing “the soul of money”.   Philanthropy is a means of instilling in children an understanding of values and the blessings of money.   It also can help the next generation to gain skills in how to communicate well, listen carefully, define goals, share expectations and be accountable.

I encouraged the advisors in the room to expand their engagement with their clients - to be “curious” and ask questions about a client’s first memory of helping others; causes that he or she stands for, believes in or supports; the major issues facing community; involving family in their philanthropy;  what  they want they want their “lifemark” to be. 

These questions will help the advisor to more broadly and holistically service all the client’s needs and interests.   And, my experience is that clients who are engaged this way, feel that they are being considered as a whole person and not just as a financial persona and this naturally draws them closer to their advisor.   

At the end of my session, I asked participants to identify two clients with whom they would engage in a conversation about philanthropy within the next month – and to identify the next steps to make this happen. 

I encourage you to try this.   I’d be happy to share suggestions with you for having these conversations and would love to hear about your experiences. 

As a philanthropy advisor, I enjoy working with families and individuals to create and facilitate a safe and productive environment to articulate values, interests and goals.   Together we develop and implement a plan to make giving meaningful, satisfying and effective. 

For more information on how I work with clients to assist them to give with heart and for impact please visit the approach and services pages on my website.

Fireside Family Conversations

The holiday season brings families together and provides an excellent opportunity to share special times and engage with each other.  As we celebrate our many blessings, why not use this time together to share those things that are important to us:  values, family stories and our interest in significant issues in our community?

This year, I am excited that our family (my husband, our two young adult sons and I) will all be away together for over a week.  In between our outdoor activities, fabulous eating and laughter over “in” family jokes, I am committed to setting aside some time to have some meaty conversations  – perhaps fireside.

I plan to start with the question “What do you think is the purpose of money?”.  It sounds simple but I have witnessed this question evoke thoughts about each person’s relationship with money and how he or she uses it and sees him or herself relative to it.    I will encourage us to each share stories about how we have seen members of our family use money and how we each have used money for ourselves and for others.  We will reflect on examples of kindnesses we have received and those we have extended to others as well as examples of people who have inspired us.  And we will mull over issues in the world that we think deserve our attention and resources – financial and otherwise. 

This holiday season, perhaps one of your gifts to each other, will be the gift of sharing from the heart about your values and what really matters to you.  You can do this with partners, children, parents or siblings.  You can start with one question or you can add more questions – at one sitting or over a few conversations.  Not only will this be a wonderful experience for you and your family, but if you are an advisor, this interaction will help you to understand and facilitate opportunities for your clients to engage with their families.  Perhaps you could even share a link to this blog with your clients as something they might try.

I am curious to hear from you regarding your experiences with this activity so please be in touch and let me know how it goes. 

Warmest wishes for a very happy and engaging holiday season and a healthy and fulfilling new year. 

As a philanthropy advisor, I work with families and individuals to create and facilitate a safe and productive environment to articulate values, interests and goals related to philanthropy.   Together we develop and implement a plan to make giving meaningful, satisfying and effective. 

For more information on how I work with clients to assist them to give with heart and for impact please visit the approach and services pages on my website.

 

What does a hand have to do with Family Enterprise and Philanthropy?

The new Family Enterprise Exchange (FEX) is rolling out its plans across Canada for exciting new programming to empower family enterprises and their advisors.  
 
As part of the FEX Xchanging Ideas event I was exposed to a wonderful video of an interview with James E. Hughes, Jr., Esq. (“Jay”), the pre-eminent family wealth expert and philosopher of the family.  His message resonated with me regarding family enterprise generally, and regarding family philanthropy in particular.  The qualities for building a healthy, strong and resilient family enterprise so easily converge when the family embarks on philanthropy together.    

So often we think of wealth as purely financial, but Jay refers to the Five Capitals of Wealth.  Each of these capitals is critical to the well-being of the family enterprise and require thought and attention.   He describes the five capitals as follows:  

  • Spiritual capital is the vision that guides a family, and reflects upon the purpose and vision to flourish;
  • Social capital is what brings consensual decision making and focuses on the social impact the family wishes to have;
  • Intellectual capital includes the governance of the family systems, rights and responsibilities of each family member and considers the family as a learning community;
  • Human capital focuses on the physical health, values and personal development of the family and its members and the development of thriving relationships;  
  • And then there is Financial capital, the numeric score card and the financial resources to carry out all the other capitals. 

Jay held up his hand to demonstrate how and why to concentrate on all the important aspects of the enterprise – not just the financial.  Consider each of your fingers as one of the capitals: the thumb as financial capital, the index finger as human capital, middle finger as intellectual capital, ring finger as social capital and pinky as spiritual capital.  With the thumb sticking up, and being dominant, all the other fingers can fold in and disappear as they become a closed fist which leads to an unhealthy system which will not survive. 
 
But turn the thumb on its head, so that the focus is on the other fingers, the other capitals, and all these capitals will thrive and flutter with energy, supported by the strong thumb.  In this way the enterprise will have dynamic meaning and purpose and will flourish.    
 
Jay uses this hand metaphor with families.  He explained how when families meet to discuss issues they may state a clear intention at the beginning of the meeting to focus on spiritual, social, intellectual or human aspects of the enterprise, but so often, the conversation reverts back to numbers. Numbers and technical issues are just something we are more used to talking about and they have an objective element to them.   To get the family back on track, Jay simply holds up his hand and turns it so the thumb is on the bottom. This leads to some chuckles and an “Oh right. Let’s get back to what we really want to be talking about here.”, which then refocuses the conversation on the other capital which really deserves the family’s attention.
 
Family philanthropy is also most effective and at its best when attention is given to all five capitals.  To support their spiritual capital, the family establishes an overall vision and purpose for their philanthropy which reflects their values as a family.   To support their social capital they build consensus on the impact they wish to have in the world and monitor and evaluate that impact.  To support their intellectual capital they develop strong governance and processes to facilitate effective granting relative to their goals and based on knowledge and understanding of how needs are being addressed. To support their human capital, they engage family members in the process of philanthropy in ways that build on their strengths and develop skills in research, critical thinking, relationship building, assessment and accountability.   And finally, to support the financial capital, tax savings are maximized and assets responsibly invested in order to meet the objectives of all the other capitals. 
 
When working with families, I too find that the conversation often drifts to the financial and the technical.  I look forward to using Jay’s handy little trick of holding up my hand and turning my thumb on its head, to remind us all to refocus on the many other wonderful aspects of philanthropy and how philanthropy has the power to assist the family to thrive. 
 
As a philanthropy advisor, I work with families and individuals to create and facilitate a safe and productive environment to articulate values, interests and goals.   Together we develop and implement a plan to make giving meaningful, satisfying and effective. 

For more information on how I work with clients to assist them to give with heart and for impact please visit the approach and services pages on my website or contact me at janice@jlmphilanthropy.com.

Today is my birthday

Today is my birthday. It’s not one of those special ones with a zero but each one is worth celebrating – especially when I am grieving the loss of a very dear friend whom we buried just three days ago after a horrible battle with cancer. 

Life and those who are important to us, and the issues which we care about deeply are at the core of who we are and what we do.  Yet, often we are hesitant to explore our hearts and our values.

Even as I prepare my monthly newsletters, when I know that getting at the emotional side of philanthropy is what is critical, I often succumb to the pattern of referring to the technical aspects of philanthropy. Yes, the technical is important, but not quite as essential as emotions and desires.  This is what really drives us.  

When I meet with my terrific family enterprise advisor group, where our goal is to discuss and impart technical information that could help clients, we always start with a “check-in” and much of what we share relates to family and personal matters.  We know those are a big part of how we deal with issues and revealing the personal brings us closer together as a team.    

However, most often when advisors meet with clients, the focus of the conversation moves quickly to the technical.  This is what we think clients expect of us and this is what they are used to.  But just as in other parts of our lives, where we know the personal is a dominant factor, if advisors explore more deeply with their clients, they will discover the many layers to their issues and will provide more holistic counsel.  Additionally, their relationships with their clients will be enhanced. 

Asking clients about their feelings regarding their wealth will expose concerns they may have not voiced before.  For example, if you include a question like: “How would you describe the blessings of your wealth?”, followed by the question “How would you describe any challenges with your wealth?”, you will learn much from your clients about the issues that they are grappling with.  These questions may naturally evolve into questions about clients’ values, how their wealth may be used more broadly, and the causes that have been important to them.  Consider some simple questions like the following:

  • What is your first memory of helping others in your community?
  • What people or causes have made an impact in your life and in the lives of those you love?
  • What do you think are the major issues facing your community today?
  • Whom in your family would you like to include in decisions about philanthropy?
  • How would you like to be remembered? What would you like your legacy to be?

These questions will go a long way to increasing your understanding of your clients and to helping them to explore ways to positively use their wealth.  And according to survey results of clients in Canada and the US, they will appreciate that YOU stepped out of the technical box and discussed their values, passions and interests.

Today as I celebrate my birthday, I am grateful for my blessings of wonderful family, friends and colleagues and also for the privilege of helping others to explore their blessings and assisting them to make the world a better place.   

As a philanthropy advisor I work with families and individuals to create and facilitate a safe and productive environment to share their values, interests and goals.   Together we develop and implement a plan to make their giving meaningful, satisfying and effective. 

For more information on how I work with clients to assist them to give with heart and for impact please visit the approach and services pages on my website.

Events That Can Spark Gifts

Often individuals consider making charitable gifts near year end, when they think about using the tax receipt for the gifts to offset taxes they will have to pay that year. 

Year end is not the only event that sparks gifts.  A good advisor will have his or her ears finely tuned to listening for events and transactions that clients will be experiencing where they will be subject to tax liability.   And, as part of the planning for the transaction, a trusted advisor should raise the opportunity to make a charitable gift in order to offset all or part of the taxes payable.  It is important that advisors raise the opportunity for philanthropy at the beginning of the process so that if the client is interested, a donation can be considered within all the circumstances of the transaction and not rushed as an add-on late in the process.   Even if the advisor is not a primary tax advisor, he or she can suggest that philanthropy be considered. 

So what are the events that a trusted advisor should be looking out for?

A common ‘sparking’ event which creates tax liability is the sale of a business or the sale of real estate. In these situations it is key for the advisor to identify where the tax liability will be realized, the various tax rates and year-end dates of different entities related to the client, and the types of assets which may be donated, so that the deal will match and maximize the donation tax credits or deductions against the tax liability.   A related type of event is the sale or merger of a public company where the company founders and other insiders may have to sell some of their stock as part of the transaction and may realize significant tax liability.  Here too, advisors may help their clients to plan for ways to reduce taxes – and philanthropy may be a very good option.    

What about a client whom an advisor learns has decided to change investment managers or otherwise change up his or her portfolios?  Changes to a client’s portfolio may result in tax liability for capital gains and with proper planning a client may donate publicly-listed securities to charity before the portfolio change to take advantage of the capital gains exemption for gifts of publicly-listed securities and use cash to reinvest in new shares.   

The 'sparking' event which each of us will experience at some point, is death.  The Canadian tax  system (which does not have estate tax) provides that a person is deemed to have disposed of all of his or her assets (subject to some exceptions) immediately preceding his or her demise, thus triggering capital gains tax for assets which have appreciated in value.  Again, comprehensive planning, including gift planning, by advisors may significantly reduce the taxes payable by a client’s estate in the year of death, the year before death and three to five years after death. 

With keen attention to clients’ circumstances and interests and solid understanding of tax liability situations and tax saving techniques, trusted advisors may use these events to help spark significant and rewarding gifts by their clients.  This holistic approach to client service is what will distinguish the advisor, in the minds of clients, as someone who goes the extra mile to address all aspects of their business and personal life. 

Sometimes clients may know that charitable giving makes sense from a tax perspective but are unsure of how they want to make a difference. As a philanthropy advisor I work with individuals and families to develop and implement a plan to make their giving meaningful, satisfying and effective. 

For more information on how I work with clients to assist them to give with heart and for impact please visit the approach and services pages on my website.

 

I Can't Get No - Satisfaction

Over the years, I have met many donors who donate thousands or hundreds of thousands of dollars a year.  When I have asked them about how they feel about their contributions, I have heard time and time again that they feel "OK".  

Just OK???  There is definitely something wrong when one makes a significant contribution and gets no real satisfaction.  To get to the root of this, my next question is “What would make it better?”   Here, the answers vary but they often include things like:

  • “I wish I could get my kids involved but I just can’t get them interested.”
  • “I just give when someone asks me to give and these are not causes that are important to me.”
  • “I have a foundation and have to disburse a certain amount every year and it feels like such a chore.”
  • “I give to the same organizations every year without really thinking about it.”
  • “I don’t really know how my money is making a difference.”
  • “I don’t feel like I’m doing a good job of my philanthropy.”

The common thread to these comments is a lack of devoting to philanthropy the attention that it needs in order for it to be meaningful.

On the heels of the 2016 Olympics, we have just witnessed exceptional commitment, focus and hard work to reach a goal and the jubilation when the goal is achieved.  Even with everyday life, we know that the more we are engaged with a project and the more intention and effort we bring to it, the greater the sense of reward. 

Yes – you do have to try, try, try.  Engaged and satisfying philanthropy includes:

  • determining how you wish to involve your family in philanthropy
  • exploring and articulating your values, the things that are important to you and how you want to make a difference
  • creating a practical and customized, flexible giving plan that aligns with your goals
  • prioritizing areas of interest and determining criteria for making gifts
  • working with recipient organizations to ensure that expectations are communicated and you are updated on progress, and
  • monitoring and evaluating your impact.

Each of these steps can be very interesting and fulfilling in and of itself – especially when working together as a family in a meaningful way.

The good news is that I know and have worked with many philanthropists who have given their philanthropy this kind of attention and instead of singing the “I Can’t Get No – Satisfaction” blues, they are positive, engaged and know they are having an impact.  

As a philanthropy advisor, I enjoy working with families and individuals to create and facilitate a safe and productive environment to articulate values, interests and goals.   Together we develop and implement a plan to make giving meaningful, satisfying and effective. 

For more information on how I work with clients to assist them to give with heart and for impact please visit the approach and services pages on my website.

Philanthropy's Do Re Mi

Many of us think that we want to somehow make a difference in the world but don’t know exactly how we want to have an impact.   

There are many examples of how to build things in our lives – like businesses, organizations, structures – and generally growing our financial resources, however, there are few models on how to use resources well, and this does require equally serious consideration.     

Andrew Carnegie, the Scottish-American industrialist and philanthropist understood this and reflected in his later years: "I resolved to stop accumulating and begin the infinitely more serious and difficult task of wise distribution." 

But where to begin?   In the Sound of Music, the Von Trapp children begin to learn to sing with  "do re mi";  for philanthropy our "do re mi" is values.     

Just over a year and half ago, I participated in a workshop put on by an organization called 21/64, a non-profit practice specializing in next generation and multi-generational engagement in philanthropy and family enterprise. The workshop introduced us to a number of excellent tools including one stand-out for helping individuals and families explore their values: the motivational values cards. 

In this exercise each member of the family is handed a deck of 28 cards with motivational values identified on each card - values like “Opportunity: creating possibilities for others to advance”; “Innovation: finding new and creative ways of doing things”; and “Recognition: being appreciated and seen for your efforts”.  There are a number of ways to do this exercise, including prioritizing all the values cards from top to bottom, but my preference is to ask each person to identify the top three to four cards that most motivate their decision-making.  Then I ask them to describe why they made these choices. 

The discussion amongst family members is always interesting and insightful.  The exercise encourages family members to become comfortable in the role of active participants in the philanthropy process so they can feel good about the impact of their gifts. This collaborative process helps everyone involved to understand and respect their individual and shared values.  

We use these values as the initial building blocks - the "do re mi" - to project into a tailored and strategic giving plan.     

As a philanthropy advisor, I enjoy working with families and individuals to create and facilitate a safe and productive environment to articulate values, interests and goals.   Together we develop and implement a plan to make giving meaningful, strategic and effective. 

For more information on how I work with clients to assist them to give with heart and for impact please visit the approach and services pages on my website.

Generosity and Happiness

Earlier this month, Dr. John Helliwell gave a wonderful presentation at our Estate Planning Council meeting.  His topic was the “Science of Happiness” and he shared insights on the state of global happiness as described in the World Happiness Report which he co-edited.  He listed the six key factors for happiness:

  • the nation's total economic activity (GDP) 
  • a healthy life expectancy
  • a sense of freedom to make decisions
  • having someone to count on in times of trouble
  • trust in others
  • generosity

That last factor “generosity” got our attention and he spent some time on this topic. 

According to Dr. Helliwell and his research, there are two secrets to being happy and they are: social contact (doing things together) and generosity (for a good purpose).  Evidently, people don’t think that they will be happier if they give things away to others, but according to science, they will be.  There is actually an evolutionary reason for this:  as a species we had to work together and help each other in order to survive in the wilderness. 

The World Happiness Report describes how behaviour that increases social bonds is associated with better health and longer life expectancy and these improved health outcomes in turn can contribute to greater well-being. World religions, their rules and moral codes, have supported helping others over the centuries. Even today in our more secular world, a culture of helping each other is promoted. 

Philanthropy has many benefits and rewards and now you know of one more very good reason for including philanthropy in your life.  Quite simply, you will be happier! 

For more information on how I work with clients to assist them to give with heart and for impact please visit the approach and services pages on my website.

 

Be the most trusted advisor

As a wealth advisor your goal is to be your clients’ most trusted advisor – the person your clients turns to, to assist them. 

The 2014 Canadian survey on The Philanthropic Conversation: Understanding Financial Advisors’ Approaches and High Net Worth Individuals’ Perspectives commissioned by Canadian Association of Gift Planners, BMO Harris Private Banking, GIV3 and PFC of financial advisors and high net worth individuals reveals that high net worth individuals value conversations about philanthropy with their advisors and also believe that these conversations can enhance their relationship with their advisor.
 
The study also reveals an astounding gap: although 91% of advisors think they are raising philanthropy with clients only 13% of clients report that their advisors are having these conversations with them.  Additionally, only 36% of clients who recall these conversations felt that they were meaningful.  Furthermore, 40% of clients indicated that they would be comfortable with their advisors raising philanthropy at any point in their relationship – even at the outset. 
 
Currently, discussions between advisors and clients have tended to be focused on technical issues, but clients want to talk about their goals and their passions.  They also want to talk about how to involve their spouse, children and grandchildren in their philanthropy.  Establishing relationships with your client’s family through philanthropy is particularly important since studies show that when a client passes away, 80% of advisors lose the spouse and lose the next generation to other advisors. 
 
Not having an effective conversation is clearly a missed opportunity.  The 2013 US Trust Study of the Philanthropic Conversation: Understanding advisor approaches and client expectations (conducted in partnership with The Philanthropic Initiative), revealed that advisors who do engage in these conversations find that they are good for business.  In fact 74% of advisors described the following benefits: 

  • Deepens relationships (75%) and establishes new relationships (54%)
  • Builds relationships with members of the client’s extended family (56%)
  • Presents a comprehensive and holistic approach to managing client’s wealth (24%)
  • Demonstrates greater interest in their clients’ charitable goals (18%) and shows the advisor is interested in more than just their clients’ money (13%)
  • Provides insights that help them better serve their clients (13%)

Moreover, that study confirmed that 40% of clients agreed that discussing philanthropy had in fact deepened their relationship with their advisor.
 
So how can you as an advisor become more comfortable meaningfully discussing philanthropy with your clients?  An easy first step is to include in your list of client questions for initial and ongoing assessment of their needs, a question like: “Are there causes that you are supporting or that are important to you?”; or “How would you like to make a difference in the world?” And then just listen - learn more about what is important to your clients.   Some clients may benefit from guidance on a strategic and thoughtful approach to their philanthropy.  
 
As a philanthropy advisor I work with individuals and families to create and facilitate a safe and productive environment to share their values, interests and goals.   Together we develop and implement a plan to make their giving meaningful, satisfying and effective.  I continue to involve the primary advisor as he or she wishes.

For more information on how I work with clients to assist them to give with heart and for impact please visit the approach and services pages on my website

"Successful families are using philanthropy to prepare their heirs for post-transition responsibilities." 

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This is the message in the excellent book Philanthropy, Heirs & Values published in 2005 by Roy Williams and Vic Preisser.  The authors surveyed 3,250 families and 91 family foundations and discovered that families found that philanthropy was generally an unrecognized, yet valuable, tool for preparing heirs in areas such as finance, accountability, mission and the importance of values.  Philanthropy also built skills in communicating well, listening carefully, defining goals clearly and sharing expectations for accountability.  These tools and lessons helped to develop heirs for success in their workplace, social settings and community settings. 

Many affluent people worry about the impact of wealth on their children and recognize that affluence has the power for good or for evil.  Philanthropy can help the next generation to see money as a tool for good.

We know that many of children’s values are formed based on what they see modeled by their parents. By involving children in family philanthropy, they are exposed to a number of observable and understandable interactions between the family and the outside world.  They can actually witness the positive impact that their family is having in their community. 

For example, in a family I will refer to as the Daniels, Tom and Katherine started a construction company in 1957.  In the 1980's they began making significant gifts to their church and the local hospital. In the 1990's they established a foundation. Tom and Katherine encouraged their three children to be involved in the foundation and one of the children helped with the administration.  From quite early on, each year they would designate a certain amount of money from the foundation to each child who would have the authority to designate how the funds were to be distributed.  That child would research the project and share the rationale for its support and after the distribution would monitor how the funds had made a difference and report back on this.  The children now have children of their own and have used this model with their children and in some cases have gone out and volunteered with organizations they are supporting.  

By working on philanthropy together, wealth may be an enabler of opportunities for heirs as opposed to being a burden.  Family members can develop mutual respect and trust as well as build family coherence and strength. They can look out at the world and embrace it together.  
 
As a philanthropy advisor, I enjoy working with families to create and facilitate a safe and productive environment for them to share their values, interests and goals.   Together we develop and implement a plan to make their giving meaningful, satisfying and effective. 

For more information on how I work with clients to assist them to give with heart and for impact please visit the approach and services pages on my website.

Private foundation or donor-advised fund – which way to go?

Not so long ago, if you wanted to donate to a fund and get a tax receipt, but distribute funds to causes over a period of time,  you needed to set up your own private foundation.  Over the past twenty-five years in Canada, community foundations and financial institutions have provided an option for donors to make a donation to the community foundation or a foundation set up by the financial institution (which are public foundations), receive a tax receipt and use the donation to establish a fund (often called a donor-advised fund) from which the donor recommends distributions over time.   

Now, donors have a choice:  establish their own private foundation or use a donor-advised fund.  

In 2014 in Canada, there were 5,376 private foundations with assets of $34.3 billion, which distributed grants of $1.7 billion; and 5,148 public foundations (of which donor advised funds form a small part) with assets of $27.1 billion, which distributed grants of $3.2 billion. There are pros and cons for each choice.  Determining which way to go depends on the donor’s particular circumstances and goals.  The following is a summary of the various considerations.

Start-up

A private foundation is an independent legal entity which must be registered with the Canada Revenue Agency (CRA) and may be funded by an individual or related individuals or entities.  A board of directors or trustees must be appointed and investment and administrative policies and procedures must be established.

A donor-advised fund may be established by making an initial contribution of a minimum amount (generally $10,000 or more) with the community or financial institution foundation.

Control

With a private foundation the donor has full control over the distribution process.  The donor also has full control over the investment decisions of the foundation.

With a donor-advised fund, the donor may “advise” where distributions are to be made and generally these recommendations are followed as long as the recipients are charities. Investment of the donor-advised fund is generally handled by the larger foundation however some foundations, for funds over a minimum value, allow the donor to also recommend the investment advisor who will manage the assets of the donor-advised fund, subject to the supervision of the foundation.   

Anonymity

A private foundation must annually report to the CRA on its directors, assets, contributions, distributions and costs.  This information is a matter of public record and is freely available on the CRA website.

Donor-advised fund contributions and distributions are annually reported by the community or financial institution foundation as part of all of the foundation’s activities and therefore a particular donor’s actions and circumstances are anonymous. 

Distributions

A private foundation is required by law to distribute at least 3.5% of the value of its prior year’s assets on charitable activities and can distribute more than this if the donor wants.  The donor and others that he or she chooses to involve must determine where and how to distribute grants, which may include an application process and the receipt of reports from recipient charities to assess impact, all of which the donor will be responsible for managing.

A donor-advised fund holder will be encouraged to make annual recommendations for distributions and he or she may involve others in these decisions.  The community or financial institution staff will handle the administrative matters related to distributions and may assist with assessing grant applications and reports  and may provide tools for liaising with charities and other community partners.

Administration

A private foundation must hold annual board or trustee meetings, administer investment and accounting practices, manage the granting and distribution processes  and complete annual CRA reports.

With a donor-advised fund, the community or financial institution foundation takes care of all the administrative tasks and charges an annual fee which ranges from 0.75% to 2% depending on the organization and the value of the fund. 

Perpetuity

A private foundation may be continued in perpetuity as long as there are directors or trustees to manage it.  The private foundation may distribute income and or capital from time to time at the discretion of the donor. 

Donor-advised funds may be set up in perpetuity and in some circumstances  allow for one successive generation to recommend distributions and after that generation has passed on the funds fall within the other funds of the foundation.  Also, in some circumstances, donors may only make distributions of income and the fund must be held in perpetuity.  Recently, however, foundations have become more open to spending down funds over a period of years and to more flexibility relative to the period of time for recommendations.

As a philanthropy advisor, I work with clients to assist them to determine which vehicle best suits their needs and objectives.  The decision is not set in stone and if circumstances change, it is possible to move assets from a donor-advised fund into a private foundation or vice versa.     

Inheritance need not just be about money

What would it look like if the conversation around inheritance did not focus on money?  Instead, what if the conversation focused on values, stories and vision? Wouldn’t this say a lot more to your family about what is really important to you and what your life is all about?

Working with families, it is enlightening to carry out an exercise where together they plot out important life events and business events that shaped the family experience and history.  It is surprising how many of the family members do not know about how grandpa and grandma actually started out, their initial vision and activities and then how this has evolved over time with the involvement of others in the family.  To increase understanding, family events can be overlapped with world events (like wars and significant economic shifts). 

The comprehensive timeline generates conversation and the telling of important stories.  From these stories come questions, explanations and an understanding of how things came about and the values that shaped them. 

In a family where money has been at the forefront of what has made things possible, a shift to stories and values creates a healthy environment to consider wealth as a means for positive impact in the world.  This leads to an appreciation for philanthropy in a meaningful and holistic way. 

An inheritance is so much richer when money is only one part of what is shared. 

As a philanthropy advisor, it is rewarding to work with families and individuals to explore and articulate their values and use these to develop and implement a plan to make their giving meaningful, satisfying and effective.

It does not have to be perfect before you start

Often people think that before they can embark upon an initiative, they have to have everything all figured out. 

When it comes to carrying out a philanthropy plan for making a difference in the community, however, it is not necessary to have all the planks perfectly in line.  You don't need to know exactly how much you will be contributing, or whether you have to have your own foundation, or even exactly where and to what you will make your contributions over the long term.  There is a lot of room to plan for flexibility and to test things over the short term. 

For example, if you are unsure about the amount you ultimately want to contribute to charitable projects, you can donate as much as you like at the outset - perhaps an amount that makes sense for your tax situation in a particular year (for instance a year when you sell property or a business and there are resulting taxes payable).  Many people don’t want to go through a full evaluation of exactly how much they will need over their lifetime and exactly how much they want to transfer to their children.  They know, however, that they will have some money to give to charity and they can contribute this amount at the beginning.

And you don’t have to set up your own private foundation at the outset – even if you think that eventually you might like a separate foundation.  There are a variety of donor-advised fund options offered by community foundations and by financial institutions.  Each organization offers different fee structures and flexibility and most will allow you to move the funds to a private foundation in the future if you choose.  (In a future blog I will describe more about the considerations between holding your funds in a donor-advised fund and in your own private foundation.)  In this way, you can get a sense of how it feels to work with a fund framework and the community foundation or financial institution will take care of the administrative details and may also be able to assist with guidance on making grants. 

Furthermore, you may consider how you want to have an impact in the short term without fully developing a long term plan.  In this way you can monitor the impact that initial grants are having and can flesh out your plan based on your experience. 

It is still important to go through a process to articulate your values and general desired impact and where appropriate to engage your family in this activity.  A thoughtful vision and mission statement will guide the processes for an effective giving plan. 

This important planning will set you on your way without having to have all the answers around the structure and ultimate value and direction of your philanthropy.  And as you enjoy your philanthropy in the short term, your understanding will grow and longer term decision-making will be much easier.  

Yes - even without all the planks lined up at the beginning, you can still envision and eventually reach a rewarding outcome. 

For more information on how I work with clients to assist them to give with heart and for impact please visit the approach and services pages of my website. 

National Center for Family Philanthropy 2015 Trends Study

There have been many changes to family philanthropy observed over the years.  Now the National Center for Philanthropy has released a new study (conducted with the Urban Institute) that provides data to support these observations.  

This benchmark study surveyed nationally represented family foundations in the United States and documents the current number, size, age, assets, and giving levels of family foundations and looks at a variety of unique aspects of family foundation governance and management practices, including the engagement of the next generation and the participation of the founding donor. 

The study reveals a number of important trends that not only reflect a changing field, but also inform where family philanthropy is going.  

Below, I have copied the 10 trends which NCFP recently reported on in their excellent e-newsletter, that they believe  - will be shaping the field for years to come:

  1. Donor-advised funds and social enterprises might get all of the headlines, but family foundations are a popular choice for a new generation of philanthropists. Family foundations might be more traditional in their approach, but many new-age philanthropists are choosing to create family foundations to manage their charitable activities. Between 2002 and 2013, the number of family foundations grew by 44 percent and during that time, total giving to family foundations almost doubled - to $23.9 billion. 
  2. Twenty-first century founders of family foundations are more engaged in their philanthropy than their predecessors. A few decades ago, family foundations were primarily the products of an estate - and the second generation was charged with interpreting the donor's wishes. But that is changing. Today's founders are much more actively involved - as two thirds of family foundations now have a founder who is still active in the foundation.
  3. Family foundations are increasingly focusing on issues - not on places. Charitable giving has long been motivated by the desire to give back to the community or region that nurtured the philanthropist. But many newer foundations report that they are putting less of an emphasis on the communities in which they were created in favor of giving to specific issues.
  4. Family foundations are more focused on effective grant making than ever before. Many older foundations focused on supporting causes in which their founders had a personal connection - whether it was their alma mater, religious institution, or home community. But many newer foundations are taking a different approach. They are instead building their grant making strategies around impact - and not necessarily personal connections.
  5. Newer family foundations are spending their assets more aggressively.One in five family foundations established in the 1990s and 2000s give more than 10 percent other corpus - as do foundations with an active donor. The minimum legal requirement is 5 percent - which means that a large number of foundations are giving more than twice as much away as required.
  6. While the idea of perpetuity will likely never die, more foundations are choosing to spend down their endowments. Twenty percent of the youngest family foundations have already decided to operate with a limited life span. This is less true among older family foundations. In fact, only about 3 percent of the oldest family foundations are operating with a limited life span.
  7. Family foundations remain relatively small - but they're growing. Of family foundations created since 1990, 78 percent have less than $10 million in assets. But three in five family foundations created after 1990s also report that they expect their assets to increase.
  8. Family foundations are taking active steps to engage the next generation.In many organizations, the emerging millennial generation is already beginning to influence giving decisions and operations. More than half of family foundations report that they are already engaging younger family members in their operations - and many of those that are not yet doing so plan to in the coming years.
  9. While family feuds work well on game shows, they aren't common among most family foundations. Nearly 90 percent of organizations report that most family members work well together. And three out of four agree that family dynamics do not have a negative effect on the foundation's work.
  10. Family foundations understand the value of capacity building and long-term relationships with their grantees. About 83 percent report making general operating grants and 63 percent give capacity building grants.

If you are interested in getting more information on this, you may contact NCFP to request a copy of the executive summary of the report or the full report.  

Giving with Heart

So many of us make our charitable contributions in a knee-jerk way.  For example: 

  • a friend asks us to support a cause that is important to him or he
  • a solicitation is presented that strikes a chord for some reason and we react; or
  • we feel an obligation to support a cause due to a past relationship or sense that it is something we just “should” donate to. 

But what if giving was an expression of who we were, what we believed and what we wanted to see in the world?  What if giving engaged those closest to us in conversations around our values and vision for the future?  What if we really explored those issues and made thoughtful and conscious decisions about where and how we wanted to make a difference?

Giving with Heart is possible! But how does it happen?    

First of all, it’s important to explore and articulate the values that motivate how you make decisions, your areas of interest, and in what ways you would like to make a positive difference - that is the impact you would like to have. 

If you choose to engage your family in your giving, it is possible to first individually articulate your values, interests and desired impact and then come together in a safe environment where you can openly share and discuss these and get to understand more about the commonalities amongst you.  Together you could build mission and vision statements that will guide you in how you make gifts going forward.   

Giving with heart provides a personal expression of what you think is important.     No wonder it is very rewarding.

In future blogs I will describe some exercises that I use to help my clients to articulate their values and desired impact – individually and as a family.

 

Family and Philanthropy: The Rewards

Charitable giving can and should be a positive, engaging and impactful experience—one that aligns with your values, priorities and culture.

It may also be a tool for family coherence and the propagation of family values. It can be an adventure where you explore and reach new heights together. 

We live in a world of consumerism and affluence where wealth has the power to be good or destructive.  By openly talking about money as a family, you can use wealth as a means for positive impact in the world, based on values, and as a way to have meaningful conversations with your children.

So how does it work?

The process begins with a review of your financial situation including the identification of what you “need” for financial independence to continue your desired lifestyle and what you “want” to pass onto your family, balancing what would be reasonable and still provide incentive for personal ambition. 

The difference  between your assets and these “needs” and “wants” will provide a pool from which to contribute strategically and effectively to causes you think are important.

The next step is for each member of the family, individually and collectively to articulate the values that shape your decisions.  Your common values form the basis of a vision and mission for your philanthropy; they guide you as you create a practical and customized, flexible giving plan that meets your particular needs, aligns with your goals and helps you create the kind of change you want to see in the world.

Next, as a family, you will itemize and prioritize your areas of interest and determine your criteria for making gifts.  You may also want to consider how family members may involve themselves, beyond the financial contribution, in the causes that are important to them. Additionally, it will be critical to work with recipient organizations to ensure that they are aware of your expectations and are committed to regularly updating you on their progress.  From this you may monitor and evaluate the impact of your philanthropy.

Your personalized framework for charitable giving will allow you to easily make thoughtful decisions that have an important impact on the world, your family and the causes that align best with your objectives.

Giving well and with purpose does not just happen - it requires the commitment to develop and implement articulated values, a clear vision and mission, a practical plan and defined outcomes.  Working on this together as a family will not only have a positive effect on the world, it will also provide a profound and fulfilling family experience.  You will be on a rewarding path and adventure together. 

As a philanthropy advisor, I love working with individuals, couples and families to develop and implement a plan to make their giving meaningful, satisfying and effective. 

 

Are You Ready to Start Thinking About Being a Strategic Funder?

Being strategic about your philanthropy is a balance between focusing on each tree in the forest and seeing the forest for the trees. There are a number of important steps which will help you ensure that your philanthropy is focused and  managed in an organized and professional way. This may apply if you are first establishing a philanthropic fund or if you want to use an existing fund more strategically. The following steps will set you on your way to maximizing your philanthropy in a way that will be engaging and satisfying.  

 

Articulate your values, motivations and desired impacts

  • Identify and engage those in your family whom you wish to involve in your philanthropy
  • Explore your personal and group values and articulate how and where you want to make a difference in the world
  • Develop shared  vision and mission statements to guide you in your philanthropy 

 

Select the philanthropic fund vehicle that meets your needs

  • Review  the pros and cons of each philanthropic fund vehicle and consider which may be most appropriate for your particular circumstances
  • Establish the appropriate philanthropic fund vehicle

 

Develop your philanthropic strategy

  • Consider the best practices in philanthropy

  • Develop policies and procedures for grant making (including how and when decisions are made)

  • Develop grant proposal forms, report forms and template contracts to support your funding  strategy

 

Guide operations and governance

  • Develop guidelines and procedures for productive communication and family harmony

  • Develop plans for operations and board policies to support effective giving

 

Integrate the next generation

  • Discuss the goals of meaningful integration of the next generation

  • Develop functional plan to integrate next generation

 

Plan for succession 

  • Consider long term view for the philanthropic vehicle 

  • Prepare letters of donor intent to preserve founder’s vision 

  • Develop leadership succession ideas that consider founder’s long term goals and cultivate family cohesion and legacy.

 

As a philanthropy advisor, I  coach my clients through each step of their philanthropy journey. Going through these processes is engaging and rewarding in and of itself.  And - the outcome - strategic and impactful granting - is extremely gratifying.  Not only do donors make important improvements to communities and the world  and  enhancing the lives of others, they also enrich their lives and those of their family.  The forest and the trees are in alignment.

How to Become a Strategic Philanthropist

Strategic or impact philanthropy identifies a challenge or need in the world and invests resources to address that problem in a targeted and measured way. It is the shift from making simple donations that you hope will help a cause, to actually articulating a focus and helping to shape a program that will have significant impact. Focus is key!

A strategic grants program will allow you to make important change. You may choose to make individual grants that are strategic or your actual grant choices may be linked in a way to accomplish an overarching goal.  

I find that clients are more engaged and satisfied when we have worked together to develop a strategic granting process, which includes the following:
 

As a philanthropy advisor, I work with my clients through all these steps, so they understand what they really want to accomplish and have strong administrative tools and practices to carry out their objectives. With focus and balance, they achieve their goals.