Financial advisors: crucial to philanthropy’s growth


Paul Penley

Paul Penley

Paul Penley

Why don’t the wealthy give more? Because they want the money, says a 2013 SEI Private Wealth Management survey of individuals representing families worth $10 million or more. The top two reasons for not giving more are (1) uncertainty about maintaining lifestyle and (2) desire to make more first. Philanthropy advisors, foundation staff and even Bill Gates can write, speak and convince wealthy individuals about the meaningful impact of giving, but financial advisors hold the keys to the floodgates.

I do wish my research about non-profit effectiveness doubled the size of gifts to high-performing organizations. However, it just doesn’t work that way. If a family I advise fears that bigger gifts could jeopardize a comfortable lifestyle down the road, the giving tends to tighten. It’s only natural.

That’s why our clients are motivated to make bigger gifts when a good financial plan is in place. Estate planners, attorneys or financial advisors who make a clear case for future financial stability drive philanthropy’s growth. When Jay Link at Kardia Planning or Connie Smith at Fairfield & Woods show a client that they can maintain their lifestyle until the age of 100 with a $4 million emergency cushion, the uncertainty about the future disappears. The sense that more money is needed dissipates.

Then the floodgates can open. The 200 SEI survey respondents said they do want to raise the percentage of their wealth that they give by 57% – they just don’t have the confidence to pull the trigger. These philanthropically inclined folks holding back because of financial uncertainty need more help from financial advisors. Advisors like Jonathan Fung at Bernstein are doing it, but more can join the ranks.

The payoff for long-term financial plans is twofold. First, larger charitable donations are put to work earlier. We at Excellence in Giving have seen clients move from giving thousands to hundreds of thousands, or hundreds of thousands to millions, because of an advisor’s good work. Second, more than half (57%) of clients surveyed by Fidelity Charitable said that if their advisor discussed charitable strategies, they would then view their wealth manager as a broad financial expert. Who doesn’t want that? And 37% of clients said that charitable discussions led to assets staying with the parent’s advisor because they were now viewed as the family’s advisor. Getting clients confident about their financial plan so they are ready to discuss charitable giving is good for everyone involved.

When it comes to deciding where to give, 48% of SEI’s wealthy respondents said ‘evidence of impact’ was the most important factor. That’s why my cadre of philanthropic advisors keeps doing its best to measure results and identify the best programs. We keep working on platforms in the US like the S&I 100 and so that charities’ impact and scalability are easily determined. However, we cannot fool ourselves into thinking that evidenced-based programs and perfect matches between donors’ passions and meaningful causes drive philanthropy’s growth. We need financial advisors to create the ‘confidence to give’ before we provide wealthy families with the ‘confidence on where to give’.

Paul Penley is director of research at the philanthropic advisory firm Excellence in Giving and creator of

Tagged in: Family philanthropy Financial advisors High Net Worth Individuals hight net worth Philanthropy advice

Comments (1)

Steve Marken

Well done Paul. The journey of the affluent is complex, especailly when overlayed with Scripture such as . . . Deuteronomy 8:18 — “Remember the Lord your God, for it is he who gives you the ability to produce wealth.” Matthew 25:21 — “His master replied, ‘Well done, good and faithful servant! You have been faithful with a few things; I will put you in charge of many things. Come and share your master’s happiness!’ ” 1 Timothy 6:6-7, 17-19 — “But godliness with contentment is great gain. For we brought nothing into the world, and we can take nothing out of it. ... Command those who are rich in this present world not to be arrogant nor to put their hope in wealth, which is so uncertain, but to put their hope in God, who richly provides us with everything for our enjoyment. Command them to do good, to be rich in good deeds, and to be generous and willing to share. In this way they will lay up treasure for themselves as a firm foundation for the coming age, so that they may take hold of the life that is truly life.” Back to top

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