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Wealth transfer

This may be old news, but I continue to be astounded that wealth transfer in the United States is anticipated to be about $136 trillion by 2052. Only $25 trillion of that is anticipated to go to charity. Where is the rest of it going? Are family members/heirs ready to handle what they will receive? How important is it to wealth holders that ALL of that wealth be left to heirs? If the heirs are unprepared for it, what is likely to happen to a) the wealth and b) the heirs? Is avoiding tax the real motivation behind charitable giving?

These are all questions brought up through the Chartered Advisor in Philanthropy (CAP) certification program I’m taking through The American College.

 Where donors get their advice

An intriguing question that is explored in the CAP program is: Where are donors getting their advice about how and how much to leave to their heirs—and to charity? Studies indicate that most clients turn to their accountants for charitable decision-making advice, but those same studies also show that advisors don’t like to start the charitable giving conversation; instead they focus on technical issues. Less than 1/3 of donors say their advisors bring up the conversation about charitable goals, values, and interests.

The tendency for professional advisors to focus on the how (the tools) vs. the why (charitable goals, values, and interests) may be the result of misunderstanding the motivation behind the reason for charitable interests. While advisors may think high net worth individuals are motivated to give to charity by the desire to reduce a tax burden, only 10% of those individuals themselves cite reducing a tax burden as a reason for charitable gifts.

Wealthy families have the ability to make a real impact in changing their communities into better places to live; they have the resources to make real change. But many need guidance to start the ball rolling. If they aren’t receiving philanthropic guidance—and encouragement—along with financial guidance from their professional advisors, our communities are missing out on some potentially fabulous supporters. Giving the bulk of wealth to family members is the default decision when wealth earners don’t know where else to turn.

Getting to the why of charitable giving makes choosing the how a more informed task for the professional advisor. Why does the client want to support charity? Why is passing a legacy on through charity important? What change does the client hope to make in the world? These are conversations that take time and that take a relationship of rapport with the client.

 Thought provoking

Our clients work hard to make their money—not just for the sake of making money; their goal is not just to leave a bunch of money to family (the default decision). But the reality is that they often don’t know what else can be done with their assets. And they want to raise responsible, healthy, contributing children. They are concerned that leaving huge amounts of cash to their children will, in the end, ruin them rather than make them better human beings. It’s quite a conundrum. Professional advisors who understand the challenges and concerns families face when looking to leave a responsible legacy will engage on a deeper level with their clients to help them puzzle out the why before they get to the how of creating their legacy plan.

Clients want the conversation about charity and legacy to occur, but many don’t know how to get the conversation started. They need a professional advisor who can start that conversation—and take the time to explore it deeply, in as many meetings as it takes, to help truly discover and meet the client’s goals. We’re here to help, so give the Community Foundation a call, 775-333-5499, for support.

Tracy Turner
Chief Philanthropy Officer


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