High-net-worth philanthropy is on the rise. In part that’s because of global troubles such as the Russia-Ukraine conflict and the Covid-19 pandemic. But it’s also because the wealthy have found new ways to be active in the ways they help. They are increasingly using formal giving vehicles such as donor-advised funds and private foundations. They are volunteering. And they are educating themselves about philanthropy.

To achieve maximum impact with their resources, affluent donors want and need the financial advisory industry to help them accomplish their philanthropic goals.

That’s what I’ve found during my 30-year career working with high-net-worth individuals and families and the financial advisors who support them. Over the past two decades, philanthropy has played an ever-growing role in how these families sustain their wealth over multiple generations and how they use it to help the world. Moreover, philanthropy is an integral part of who these families are, reflecting their values, missions and worldviews.

That’s particularly the case today as millennials start playing a pivotal role in their families’ decisions. This cohort is focused on philanthropy and sustainable investing. And Bloomberg projects that younger Americans will inherit as much as $73 trillion from the older generations over the next 25 years. In a report that my colleague Russ Alan Prince, the executive director of Private Wealth magazine, and I published in March 2021 on the Financial Advisor website, we surveyed 239 single-family offices and found that 79.6% of those in the younger generations of their families were much more likely to engage in future philanthropy while only 45.2% of the offices’ older founders were interested in doing so.

Giving is not just for millennials and Gen Z, though. The vast majority of affluent households (88.1%) donated to charity in 2020, according to a 2021 Bank of America study on philanthropy. The study also shows that 16.5% of affluent households had a will with a specific charitable provision in 2020, while only 13.3% had one in 2017. In the same three years, those households with a planned giving instrument rose to 7.4% from 5.2%.

The Gold Standard for Family Giving
One way that multigenerational wealthy families manage and deploy their philanthropic giving is through private foundations. According to Foundation Source’s “2021 Report on Private Foundations—Grantmaking,” foundations increased the number and size of their gifts year over year. And the smaller foundations, defined in the report as those with less than $1 million in assets, were some of the biggest heroes, giving nearly three times the 5% of assets they were required to disburse.

But the bigger story isn’t just that foundations’ granting increased; it’s how it changed in response to the numerous and varied needs that have emerged in recent years. Foundations didn’t just stay the course. Instead, they quickly modified their grants to respond to events such as the pandemic, the struggles over racial inequality, natural disasters and humanitarian crises, delivering philanthropic dollars when and where they were needed most.

Most recently, in response to the Russia-Ukraine conflict, Foundation Source clients gave more than $7 million to Ukrainian relief efforts in the five weeks after the ground conflict began on February 24, with grants ranging in size from $100 to $2 million.

These numbers illustrate that high-net-worth families are taking action to be responsive to the world’s needs.

Offering Holistic Financial Advice, For Real
The growing interest in philanthropy among the affluent represents an avenue for advisors to connect with their wealthiest clients on a new level and truly deliver holistic financial advice. Even the best-intentioned advisor aiming to give “holistic financial advice” isn’t really doing so if philanthropy is left out of the conversation.

Many advisors mistakenly believe that high-net-worth investors don’t need or want to discuss philanthropy. But in actuality, they need help with a giving strategy and a budget, something less than half of them have, according to the “2018 U.S. Trust Study of High Net Worth Philanthropy.” They also can benefit from a philanthropic advisor to assist them with formulating and executing their charitable agenda. Our 2021 single-family office research (referenced in the Financial Advisor website story) also shows that a mere 15.5% of ultra-high-net-worth families had engaged philanthropic advisors, indicating abundant opportunity to enhance and possibly institutionalize the structure and process of affluent donors’ philanthropy.

So how can financial advisors step in to help? For starters, they can ask their clients the following questions:

• Are you giving now? How satisfied are you with these activities?
• What do you want to achieve with your charitable giving? What causes and values are important to you?
• How involved do you want to be with your giving?
• Is annual grant-making to charities enough or do you want to do something more hands-on like start or run a new program or align your investments with your values?
• How much do you feel you can contribute each quarter or each year?
• Have you considered a formal charitable giving vehicle such as a private foundation, charitable remainder trust or donor-advised fund? Why or why not?
• What do you want to achieve with your overall wealth?
• Do you hope to involve more family members or establish a family legacy? If yes, have you considered that charitable giving is a great way to unite multigenerational families around a common cause?

The answers may surprise you, and what’s more, they likely will take your advisor-client relationship to a new and deeper level.

Hannah Shaw Grove is the chief marketing officer of Foundation Source, the nation’s largest provider of management solutions for private foundations. The firm works in partnership with financial and legal advisors as well as directly with individuals and families.