Far out Friday: Advising clients to seek a charitable high

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The top reason people give to charity is not for the tax break, but rather to express deeply held values and to contribute to their community.

At a Women Advisors Forum in Newport Beach, CEO of the National Philanthropic Trust in Pennsylvania, Eileen Heisman, told advisers how they could encourage their clients to think charitably. Heisman said that by talking about philanthropy, advisers could have more meaningful conversations with their clients, and ask people what’s really important to them.

If you’re having trouble convincing clients that giving is a good idea, Heisman gave advisers a good tip to mention.

“The same feeling you get from an orgasm, or doing a certain kind of drug, you actually get from a certain sort of giving,” she told the room full of women.

In the US, giving has actually been about 2% of GDP for the last 40 years, with philanthropists giving a total of US$300bn in 2011. And, interestingly, individuals account for 75% of those donations. “So it’s individuals,” Heisman says, “not foundations and corporations that are making most of the gifts.” Australia gives, on average, $2bn a year to not-for-profit organisations.

There are plenty of ways your clients can give to charity:

  • Giving appreciated securities that the charity can then sell on
  • Business donations, including closely held stock or restricted stock
  • Gifting real estate
  • Establishing/modifying a private foundation

Heisman urged planners to remember that certain activities that clients think will bring them happiness, often don’t. These might include making purchases or going on vacations. But giving to others and to issues they are passionate about can create a durable sense of well-being, she says.