Five signs a client is ready to talk about philanthropy

Here are five potential triggers to discussions with clients about charitable giving:

1. A big event
Certain occurrences in a client’s life might inspire him or her to think about making regular donations to a charity or two.

For example, a client may want to start donating to a charity after attending a special event for a cause or volunteering for an organization, says Maureen Glenn, manager, tax and estate planning, with Richardson GMP Ltd. in Toronto. As well, other life events, such as a family member being diagnosed with an illness, might prompt an interest in philanthropy.

2. A windfall
When clients come into sudden wealth, they might be receptive to the topic of charitable giving.

If a client has recently sold a business, received an inheritance, won the lottery or, in some cases, even gotten divorced, says Ryan, that may an opportunity to talk about charity might arise. The client might be willing to discuss a philanthropic plan with which he or she can establish a legacy.

3. Educating children
Clients who want to teach their children about community involvement may be interested in options such as donor-advised funds.

Some parents are looking for ways to engage their children, Ryan says, and to show them that there are more important things in life than the latest toy.

For example, Ryan says, clients who set up a donor-advised fund can let their children choose a charity each year to receive their donation.

4. There’s no need for an inheritance
Some clients are not concerned about leaving money to family. Those clients are often open to suggestions about charity.

Charity often becomes an important part of the estate plan for clients who don’t have children, Ryan says. It can also be important to clients with children who are successful and financially independent and don’t need money.

As well, some clients worry that their entire estate would be too much to leave to their heirs, she says, citing Warren Buffett’s quote: “I want to give my kids enough so that they could feel that they could do anything, but not so much that they could do nothing.”

Clients such as these may be interested in leaving part of their estate to a charity.

5. The client’s will
When reviewing a client’s will, look out for any bequests to charities.

Sometimes a client will leave large amounts to charities in his or her will without properly planning for the tax implications, Ryan says. Clients can claim donations up to 100% of their net income in the year of death. Without proper planning, the client could be wasting tax credits.

It may be best to talk to the client about making donations, within reason, during his or her lifetime, she says.

This is the first in a three-part series on discussing philanthropy with clients. Next: five more triggers to conversations about charitable giving.