The philanthropic service division of Morgan Stanley Smith Barney's private bank also reaches clients with an in-house quarterly magazine called Perspectives in Philanthropy, which lets clients know what others are doing. Melanie Schnoll Begun, managing director of philanthropic service at Morgan Stanley Smith Barney, is particularly interested in helping clients of the bank determine how their money can have the greatest impact, and has given a presentation titled "Higher-Impact Philanthropy: Bringing Engagement to New Levels" at numerous advisor seminars. "My goal is to help advisors deepen their conversation with philanthropically minded families who want to achieve significant impact in their giving, however the family defines impact," she says.
Schnoll Begun and her team have also brought like-minded clients together to collaborative charitable ventures. Her approach is very tightly tailored to the individual's interests and often begins with a one-on-one discussion in which she asks some soul-searching questions. As one example, she recalls a lunch several years ago with a client who wanted to start a philanthropic plan but wasn't sure where he wanted his money to go. She began by asking him, "If you were to go to a doctor for a checkup, what would be the scariest diagnosis you could receive?" The client said he thought nothing would be worse than being told he was going bald. It seemed like a strange answer, she says, but it turned out that he had suffered from childhood alopecia, or baldness that might be caused by virus, autoimmune disease or stress. The man decided to fund research into childhood baldness. Even then, the advisory team conducted research into where the funding would have the greatest impact and learned that one of the greatest needs was for the training of skilled weavers to make human hair into wigs. "So that is partly where his money is going," says Schnoll Begun.
She has also introduced art curators to families that want to fund art-related projects. One such family, after a number of meetings and multigenerational discussions, decided to focus their philanthropy in three areas: historical landmark preservation, bringing art to hospitals and a series of online virtual museums. The third area was something that younger family members wanted to do and, as Schnoll Begun notes, was not a project that would fit into a traditional definition of philanthropy. "But it has served another important purpose," she says. "It has created excitement within the young generation about using the family money for social purposes."
Achieving Family Harmony
Indeed, philanthropy can be a very useful tool for bringing together family members with diverse interests. Bickel and his team often attend family meetings to facilitate that goal. "We help them hone a family mission statement, then figure out philanthropic areas that fit into their family mission," he says. "That way the charitable gifts are less emotionally driven." A family mission statement can be flexible enough to include gifts addressing various political and social causes or it can offer the family a way to find recipients that represent a middle ground.
What Bickel advises most families to do is divide all non-profit organizations into five categories: arts, education, health, religion and social services. "The family has to choose one to three of those categories to support," he says. "That leaves a lot of room, but if someone is interested in something the rest of the family considers off the wall-say, exotic art-I might suggest that they allow a small grant, maybe $5,000 to $10,000 in that area. That takes the pressure off the family to quarrel about it." He often suggests that the family reprioritize its philanthropic mission each year to accommodate a range of interests. "Say this year the family wants to give to arts, education and health," he says. "And maybe in the education area they decide they will give only to K-12 Native American children." The next year they can select a new focus.
Economy-Driven Vehicles
While taxation might not be the prime motivator in philanthropy, this is an opportune time to help clients set up charitable trusts and other structured vehicles that take advantage of favorable tax treatment, particularly since high-net-worth Americans may be paying higher taxes under the Obama administration.
Shenkman has also been helping his clients set up vehicles that help make their money work effectively in the current economy. He has suggested making pledges to charities that will be paid over a decade or even longer. Traditionally, most large donors have spread their gifts over a period of three to ten years, but a deferred gift of any length can allow the donor to take tax deductions each year that he makes payouts, while the charity can publicize a large pledge to encourage other donors to give similar amounts. Another low-cost technique an advisor can recommend is for a client to take out a life insurance policy with a charity as the beneficiary. The charity will not actually receive the money until the donor's death, but the pledge can be helpful in fund raising. "Using some creative spins on basic charitable giving," notes Shenkman, "can enable a donor to continue giving at some level, but tailor the planning to fit current circumstances."