According to the National Philanthropic Trust, Americans made charitable donations of nearly half a trillion dollars in 2022. Some $319 billion of that came from individuals, while $105 billion flowed from foundations. Yet despite those huge numbers, research has found that philanthropy is not a major area of engagement between financial planners and their clients, even with clients of significant wealth.

There are surely many reasons for this gap, but I’d like to point out a big one: Advisors are not using technology in this area the way they do everywhere else.

Consider that a number of sophisticated tools have emerged in the investing, banking and planning spaces that can help advisors perform at scale many complex processes—such as constructing portfolios, monitoring for risk exposures and customizing estate plan documents. This has helped advisors better engage and service their wealthy clients, especially in areas such as retirement planning, tax-efficient investing, cash management and wealth transfer to the next generation.

Where are such tools when it comes to the giving space? Why aren’t giving and legacy getting the same treatment? Surely technology has been embraced by foundations and philanthropists. But not enough advisors are talking about that.

There are many ways for people to give. They can make direct donations. They can open donor-advised-funds. They can create vehicles for planned gifts, including charitable remainder trusts (CRTs) or charitable lead trusts (CLTs). Those who have achieved greater net worth levels can go on to do more sophisticated work by establishing charitable foundations.

But no matter what vehicles people choose, advisors should be using tech in a way that makes them more active partners with their clients on philanthropic matters, offering wealthy givers turnkey services and the ability to implement their mission easily and efficiently.

New “phil-tech” can help advisors support people who are new to giving as well as experienced philanthropists. In the early stages of the philanthropic journey, technology can help givers open charitable vehicles quickly and frictionlessly, help them find potential nonprofits whose mission fits their objectives and help confirm the tax-exempt status of charities with the IRS to ensure the gifts are tax deductible. As giving becomes more complex, there are many tools that can streamline the grant proposal process: The grant documents can be created with pre-populated templates, and there are two-way portals that allows donors and grantees to collaborate.

There are also tools that automate grant payments once those proposals are approved. More tailored tech simplifies the unique tax-reporting requirements of foundations and charitable trusts and helps board members and trustees be more efficient with digital voting and board books. And finally, new apps can aid in the collection and centralization of impact data to help givers and their advisors assess progress and plan for the future gifts.

Beyond these functions, technology can make philanthropy more accessible and allow clients’ financial counsel to help better coordinate their efforts. Consider these benefits of using technology to support giving:

Integration. First and foremost, technology can help philanthropic giving become a more integral part of financial planning. This will be a tremendous service to clients, since it allows an advisor to bring all of a client’s goals into alignment—their personal investment objectives, their giving and their legacy planning (and by helping with legacy, they help a family articulate its values and vision). Technology also lets advisors engage with clients in a new and deeply personal way, increasing the value of the service they provide and keeping more assets under a single umbrella.

Accessibility. Second, technology will lower overhead and make the process of opening vehicles less complex. That means more people and families can set up charitable trusts and foundations, establish donor-advised funds or give in other ways. In effect, more people will have more ways to give.

Efficiency. On a more practical level, technology will allow advisors to become more efficient, which will also make it easier for clients to give. Technology can make foundations themselves more efficient, reducing overhead and leaving more assets available for grants. The same is true for trusts and donor-advised funds, which once were available only to those who knew about them and had the specific skills to create them. With apps today, finding and giving directly to a nonprofit can be a push-button experience.

What Integrated Wealth And Philanthropic Planning Looks Like
One key to making philanthropic technology more accessible is getting it onto the advisor’s dashboard. In the future, advisors should be able to look at a client’s overall financial picture on their portal (including the giving) and help with charitable assets and transactions the same way they do with a client’s retirement accounts.

Look at the ways fintech has transformed personal finance: It took stock trading from the realm of Wall Street specialists and put it in the hands of everyone. It made the everyday processes of banking as easy as pushing a button on the smartphone. Loans, mortgages, taxes, accounting—all of these fields have been profoundly democratized with software-as-a-service approaches.

I believe that advisors and wealth firms should have a central role in their clients’ philanthropic discussions, and by equipping them with tailored tech solutions, we can enhance the impact their clients are making while helping advisors strengthen their client relationships.

This change won’t take place overnight, but I know we are on the way to elevating giving and philanthropy to the same level as investing and retirement planning: by making them an integral part of everyone’s financial plan, for the good of the clients’ legacy and for the good of the world.

Joe Mrak is the CEO of Foundation Source.