In a 2019 study by Fidelity Charitable, more than three quarters of millennials reported they had made at least one impact investment. Despite this, just 41% of financial advisors have discussed the topic with their clients, and only about half of advisors feel that they understand it well.

The popularity of impact investing is showing no signs of slowing down. Last year, investments in impact investing funds at Fidelity Charitable passed $1 billion, with an 18% increase in charitable dollars allocated to impact investments and a 15% increase in the number of grants to impact investment nonprofits.

As this movement grows, advisors face both a mounting responsibility and opportunity to educate themselves and their clients about how and why the strategy can work for them. When it comes to initiating this values-based conversation with clients, charitable giving serves as a perfect connection point.

4. Demanding Transparency
The philanthropic sector is a powerful reflection of American society. So it makes sense that as the next generation is demanding transparency from employers and brands, they’re also demanding it from the charities they support. When it comes to COVID-19 relief, donors are especially confused. Many feel like they don’t have the information they need to effectively, and confidently, support efforts to combat the pandemic.

Consequently, clients are turning to advisors for information on not only how much to give but where to give and how to measure impact. Rest assured, advisors don’t have to become charitable experts to answer these questions! Simply bookmark some trustworthy resources to share with clients:

GuideStar—Database of over 1.8 million nonprofit organizations that summarizes each one’s mission, programs and financials.
Charity Navigator—An independent evaluator that provides easy-to-understand ratings of charities based on their financial health, accountability and transparency.
Boost Your Giving—A guide to help make donors’ giving more satisfying and effective.
COVID-19 Giving Guidance—“How to help” landing page with list of organizations actively working to provide aid in the face of the pandemic.  

By doing this, advisors can equip themselves for the charitable conversation and deliver meaningful insights and peace of mind to their clients.

5. Local Giving From Unexpected Sources
In most cases, donors prefer supporting causes close to home. It’s important that advisors become familiar with local organizations and the causes that matter most to their client. This is one of those areas where having a high emotional IQ sets advisors apart.

For those who aren’t familiar with local charities, community foundations are a great place to start. As is the case with many disasters, community foundations know the needs on the ground and are working to appropriately deploy resources to community-based organizations. Advisors can locate local foundations on this interactive map by the National Center for Family Philanthropy and Giving Compass.

As clients consider local giving, advisors should also think about the client’s portfolio and the smartest giving strategy. Even with recent market volatility, clients may have stocks that have generated substantial gains over the past decade. Rather than selling stocks and donating the net cash to charity, they can donate shares directly to charity and minimize the capital gains tax. (More on that here.)