How to help your clients create a charitable giving plan

If you have clients who are — or who want to be — giving more than about 5% of their assets to charity, they need a charitable giving plan.

A charitable giving plan is exactly what it sounds like. It’s a strategy individuals or couples can use to be more intentional about their giving, with the aim of getting more enjoyment and fulfillment out of their philanthropy.

A charitable giving plan gives a donor the power to say ‘no thanks’ to well-meaning fundraisers. But it also gives them an opportunity to delve deeper into the issues that are important to them, furthering their sense of empowerment and impact.

Fortunately, a simple charitable giving plan is something that can sit nicely within a client’s overall financial strategy. Here’s how to help your client get started.

  1. Agree on a budget.

As a financial planning professional, this may be an obvious first step. But it may not be so obvious to your clients, many of whom may give in a hap-hazard way throughout the year.  Come to the table with an estimate of how much they could reasonably afford to direct to charity on an annual basis.

  1. Help the client write out their ‘blue sky’ giving ideas.

Encourage your client (or clients, if you’re working with a couple) to think broadly about the issues that are important to them. Spend some time jotting down their “blue sky” giving ideas under two main categories:

  • Charities we traditionally support. These are the organisations and issues they tend to support on an annual basis. For example, the clients might make a regular donation to their church at Christmastime, and they might have a handful of monthly direct debits going to charities supporting broader issues like nature or disaster relief.  Don’t forget regular giving to community groups and annual events, like charity galas or fun runs.
  • Causes we’d like to explore supporting. These are the issues your clients feel are topical, urgent and speak to them on a personal level. They may be causes they’ve given to before. Or something might have happened recently—perhaps they read a news article or travelled someplace new—and that experience has made them think “this is an issue we want to do something about.”

  1. Settle on one to three issues to support.

Next, you’ll need to help your client settle on a small number of issues they can reasonably support over the next several years. Remember that it’s more impactful to focus donations on one or two charities, rather than ‘spread the love’ by giving small amounts to a wide range of organisations.

At this point, help your clients organise their larger list into:

  • Supportive gifts. These are smaller donations to the charities the clients traditionally give to, as in step number 2. It should include gifts under about £100 that are given to groups like community centres, places of worship, alumni associations, and so forth. Basically, charities the clients want to support, but on a modest level.
  • Transformational gifts. These are the major gifts. If the clients have identified one or two issues they’re really passionate about—maybe fighting heart disease or advancing women’s education—this is where to put the bulk of their charitable budget.
  1. Research charities addressing these issues (or bring in some professional help).

In addition to “setting a budget,” this is the step many donors end up skipping. But it’s vital because when a donor understands the issue and how exactly the charity they’ve chosen is addressing it, it opens the door to so much more empowerment and joy from giving.

Informed donors become excited about how charities are advancing their issue. They read more articles about the issue, they find ways to volunteer, and they talk with their friends about what their donations are supporting. In short, informed donors are happy clients.

The hands down best way to learn about how and which charities are addressing an issue, is to bring in an independent philanthropic adviser like Thoughtful Philanthropy. We will write an impartial, well-researched report on which charities are working in the client’s chosen area, and the strategies they’re following. The report fee can be easily woven into your overall client package, or the client can pay for it themselves.

  1. Decide on your giving vehicle.

Now that you’ve settled on the charities the clients want to support, you’ll want to discuss how the gifts will be made. Simple cash gifts made by the client to the charity are certainly an option.

But you should also discuss more formalised giving vehicles. On the one hand, there’s always the option of setting up a charitable foundation. But foundations can be expensive and time-consuming, so you’ll need to make sure it’s really what’s best for your client given their needs.

It might be that setting up a donor advised fund ticks all of the boxes for your client. Donor advised funds (DAFs), sometimes called ‘charitable giving accounts’, are growing in popularity in the UK. They’re low-hassle, tax-friendly ways to set aside money for charitable giving.

For more on the differences between charitable foundations and DAFs, see the Thoughtful Philanthropy comparison chart.

  1. Follow-up and continue the conversation.

Now that you and your client have done all of the hard work, make sure you follow up to keep the client on track. Philanthropic giving can easily fall to the bottom of a busy client’s to-do list, and they’ll expect you to keep them accountable. You can set up a few check-in phone calls, or just send them a friendly postcard reminder of their charitable giving goals.

The most important thing is that you’ve successfully integrated your clients’ passions into their overall financial strategy now and for the future. It’s given you a topic to revisit and find new ways to connect with your client on a deeper level for the long-term.