We believe that every nonprofit should seriously consider the idea of asking its volunteers and supporters who work in the financial industry to serve on a Philanthropic Advisory Council (PAC). These professionals can help you create and strengthen your organization’s gift planning culture.
These loyal supporters may be pleased to serve. But it’s important to know that many of them will need training about how to have philanthropic conversations with donor prospects. In a study conducted by Bank of America and The Philanthropic Initiative, high net worth individuals who had recently given large philanthropic gifts were asked how satisfied they were with their financial advisors when it came to the idea of philanthropy? Only 21% were satisfied with their advisors!
When asked why they were unsatisfied, the most common response was:
- They were frustrated that they (the donor or client) had to initiate the philanthropic conversation. This is in line with a study conducted by Bank of America/Merrill Lynch that found a staggering 94% of the time it was the donor/client who first brought up the idea of a charitable gift – not the financial professional.
- They were frustrated that their advisors focused so much on the technical aspects of their financial plan (i.e. tax consideration, wealth structure, etc.) with not nearly enough discussion about their personal or social values and how philanthropy would make the donor/client feel.
In fact, 34% of high net worth individuals said they would be more open to discussing charitable giving if their financial advisors were to bring it up first. Better yet, the number jumps to 43% if the advisors shared with donors their own philanthropic engagement.
A study conducted by US Trust in partnership with the Philanthropic Initiative found another glaring disconnect between donors and their advisors. Some 46% of advisors believed that their clients were motivated to give a major gift primarily to reduce their tax burden. If the tax laws were changed to reduce this income tax deduction, advisors believed it likely would lead their clients to reduce or eliminate a gift. Yet when donors were asked the same question, only 10% stated that the loss of the tax benefit would alter their reason to give.
So what insights from these studies can help us better serve our donors?
- Donors very much want their financial professionals to take the lead and introduce the philanthropic conversation.
- To be truly effective and donor-centric, your PAC members will need training and guidance about how to have a meaningful philanthropic conversation with donor prospects.
- Despite what many advisors think, it’s important to recognize that donors are not usually motivated by tax savings when planning for a legacy gift.
A Philanthropic Advisory Council can be a real game changer for many nonprofits. It can help create a gift planning culture and motivate six-figure gifts. But as in so many areas of life, it takes education and commitment to reach the goal.