Over the past year, most HNW clients have maintained or increased the level of their donations in response to the pandemic and various other challenges in society. However, some wealth, tax, and legal advisors are frustrated and bewildered that a small proportion of their clients, most of whom have more than enough wealth for themselves and their heirs, continue to show little interest in helping others even during these times.

Covid and the economic fallout have jolted some clients into action, as they, someone they know, or their businesses have been impacted. This was the moment that some realized that they could no longer look away. The realization that they may suddenly get sick or die from Covid, or their businesses may suffer or fail, has caused some clients to reconsider their charitable and estate plans and their legacies. Others have become philanthropic as they have realized how fortunate they or their businesses have been while others have suffered.

The pandemic has enabled many advisors to re-engage their previously disinterested clients in the charitable planning conversation. Though few clients decide to give to charity during or after their lifetimes purely for tax reasons, some of these reluctant givers do respond to this approach during times like these, especially once they understand that there are tax benefits to giving.  Those who do not want to leave many of their assets to the government, do not have children, or do not want to pass down too much to their heirs are especially interested.

The question remains for advisors, especially for the great majority of advisors who are charitable, is to what extent they should engage in the conversation? Is it worth potentially risking an awkward discussion or even a relationship to bring up the subject again? Should an advisor broach the subject when the client indicated several years ago that they were not interested or when the advisor notices that there were few if any donations on their client’s tax return?

 Increasingly, especially for those advisors and firms who do give back themselves, the answer is yes. There has never been a better time to introduce the topic or revisit a previous conversation. Markets are near all-time highs while the need has never been greater. Even though some clients are not exposed to the suffering that exists or only see one side of a story through their preferred media, nearly everyone is aware that many face challenges today.

Most clients will understand that their advisors have to bring up the conversation so that they can provide the best financial, legal, and tax advice.  At some point in their lives, clients will allocate some assets to charity, so it’s in their best interest to plan far in advance of their deaths.  All advisors have had clients who were close to death and decided at the last minute to give, but because they did not have the capacity to make wise decisions at that point, they missed the opportunity to have experienced the joy or satisfaction of giving during their lifetimes.

It is important to ask clients the right questions. Simply asking clients if they are philanthropic or would like to be is not sufficient. Clients may not be philanthropic because they do not know how to start, and it’s just easier for them to say that they are not interested. Advisors may be able to help clients by uncovering the reasons that they do not give. Some of the most common reasons are:

1. They do not want to be solicited by charities for additional donations
2. They are not connected to any charities
3. They feel like charities will not be efficient in using their donations
4. They are concerned about their privacy

The common perception of advisors is that clients feel that they do not have enough money to give it away, even though past US Trust studies have shown this is not the case for most. Even if it were, most advisors can quickly demonstrate that the clients have plenty to give away, maintain their own lifestyle, and pass down assets to their heirs.

Though advisors may not be experts in charitable giving, they often can address their clients’ concerns and overcome basic objections. They can then share content or make connections that will help their clients begin to be comfortable and confident and develop a charitable giving strategy.  

Many advisors discuss their own philanthropic journeys and share how they became charitable, while others discuss how other clients in similar situations went through their own evolution. These conversations often help to deepen relationships with clients and enable advisors to retain clients and work with these clients’ spouses and heirs.

Advisors have become aware that there has never been a better time to talk with their clients about their plans for charitable giving now and in the future. If not now, when? There is great need, interest, and the opportunity to make a difference, and the benefits to clients, advisors and the charities in need are numerous.

Ken Nopar is the vice president and senior philanthropic advisor for American Endowment Foundation, the country’s sixth largest and leading independent donor-advised fund. AEF works with donors and their financial, legal and tax advisors in all 50 states.