Wealthy families and individuals who have ambitious philanthropic goals or oversee a formal charitable giving vehicle likely face additional challenges that might warrant specialized assistance. In these cases, a philanthropy expert can provide valuable benchmarks and insights as to the aspiring donors and their professional advisors navigating the current situation together and planning for the future.

We spoke with Elizabeth Wong, national director of philanthropic advisory services for Foundation Source, to understand the value-add of working with such an expert, scenarios when philanthropy support is typically required, and how to partner effectively with a philanthropy advisor. 

Russ Prince: Why seek philanthropy guidance and support? 
Elizabeth Wong: When you consider the myriad facets of wealth management—investments, tax and estate planning, risk management, asset protection, retirement—providing thoughtful and strategic philanthropic guidance to clients can be one task too many. For most wealth advisors, charitable giving is a regular topic for fourth-quarter client discussions yet it often isn’t covered in much detail beyond whatever year-end donations clients want to make.

Charitable giving, however, can be so much more, particularly for those who have the means to establish private foundations or charitable remainder trusts and contribute to donor-advised funds. A philanthropy advisor can assist with facilitating these more intricate initiatives, either directly with the donors or behind the scenes as support to the donors’ professional advisors. 

For private foundations, in particular, philanthropy is year-round. Considering the endless ways one can give through a foundation (e.g., making grants, funding proprietary research, running a scholarship program) and the numerous issues associated with foundation management, private foundations generally require more extensive continual guidance. 

Prince: What are some typical scenarios that warrant specialized philanthropy advice? 
Wong: With respect to private foundations, philanthropy advisors often assist with:
• Establishing a foundation—its administrative structure and processes.

• Partnering with key foundation members to design their leadership approach, board policies and procedures, and an overall direction for the organization.

• Developing a strategic philanthropic plan—the foundation’s mission, goals, and key initiatives.

• Implementing the philanthropic plan such as issuing grants, impact investing, and community outreach.

• Transitioning leadership or management of the foundation to the next generation.

• Engaging multiple generations of a family in the foundation’s activities and board.

• Determining appropriate compensation for foundation board members.

• Understanding foundation IRS compliance.

As such issues can be complex, working with a philanthropy advisor can be the most efficient and effective means to helping a family tackle them and achieve its philanthropic goals. 

Beyond foundations, philanthropy advisors can help any charitably minded individual or family with understanding their giving options and possibilities. Some budding philanthropists might find that contributing regularly to a donor-advised fund works best for them; others might want to employ multiple charitable vehicles to achieve maximum impact. In any case, philanthropy advisors come with distinct domain expertise, experience working with a range of high-net-worth clients, a toolbox for solving critical issues, and a neutral stance to keep things focused.

Prince: How can professional advisors, such as family office staff, attorneys, tax specialists and investment managers who have long-standing relationships with their clients, partner effectively with a philanthropy advisor?
Wong: As with any partnership, straightforward communication is essential. The clearer the goals and parameters are, the more effective the philanthropy advisor can be. Perhaps the most important step is recognizing how philanthropy advisors can complement the work of key relationship managers. By bringing in an expert resource in a specialized area such as philanthropy, those professionals are adding value to their existing client base and demonstrating a creative approach to sourcing solutions for all of their client needs.

Thinking through the following will help:  
• Have you and your client discussed formalizing and increasing philanthropic activity but uncertainty about how to move forward has put the topic on the back burner?

• What charitable giving issues have come up where you think your client would benefit from a deeper discussion?

• Has your client ever said: “I want to shift my focus to charitable giving, but I’m not sure where to start”?

• Consider how philanthropic advisory work can complement some of the financial or planning initiatives you may be undertaking with your client.

• What issues do you need the advisor to address? What will be their scope of work?

• Is your client open to working with the philanthropy advisor?  

• Will the advisor have direct contact with your client or only with you?

• Will this be a one-time project for the advisor or are you and your client seeking continual philanthropy support? Be sure the timeframe you set is realistic, given the availability of your client and the scope of work.

• Provide the advisor with thorough background material on your client in advance of their first meeting. Doing so will accelerate the advisor’s ability to partner effectively with you—and it will show your client that the advisor has done their “homework.” 

• Formalize your partnership with a signed engagement agreement before starting your work together. It should define the scope of work, timeline, outcomes, fees and any contingencies or liability issues. 

With this degree of forethought, professional advisors and their clients will be well-positioned for a positive experience with a philanthropy expert. The relationship can be built on solid understandings and expectations and will have the potential to foster a richer sense of purpose and trust over time as they address the clients’ philanthropic activities and challenges together.

Russ Alan Prince is the executive director of Private Wealth magazine and one of the leading authorities in the private wealth industry. He consults with family offices, the wealthy, fast-tracking entrepreneurs and select professionals. Connect with him on LinkedIn.com.