Talking with your clients about charitable giving can deepen your relationships with them.
“Charitable giving is heartfelt and close to the values of the clients,” says Malcolm Burrows, head of philanthropic advisory services with Scotia Private Client Group in Toronto. “Being able to speak to that dimension in their lives really opens up a total wealth-management relationship.”
First, determine whether your client is likely to have an interest in giving. Charity may not be on every client’s mind, so know the signs before starting the conversation.
You have to “zero in on the right kind of clients,” says Burrows. “Look at the clues and make sure you’re responding and bringing the right resources to the table.”
Usually, the clients likely to give are roughly age 50 to 55. That is the age at which most people are out of the “high debt” or “building” phase of their lives, Burroughs says. As well, clients interested in philanthropy are often those who have strong values, are wealthy or have a small family.
Here are some questions to ask your clients when considering charitable giving:
1. Do you know the basics?
Make sure the client understands the general rules about charitable donations and taxes, says Susan Howe, a regional financial planning consultant for Ontario Southwest with RBC Financial Planning.
Assess how much the client already knows about the tax rules regarding charitable giving, Howe says. Then take the time to fill in any gaps in the client’s knowledge to make sure that he or she can get the greatest tax benefit out of his or her donation.
Of course, you need to be careful about offering tax advice. Recommend a tax expert if the client requires detailed information or advice.
2. Is it an ordinary gift or an exceptional gift?
Get some clarity on exactly what type of donation your client wants to make, Burrows says.
Find out the scope of the client’s interest in giving. Spend time listening and asking questions to find out whether the client wants to give small annual donations or do something on a larger scale as part of a financial plan or an estate plan.
3. Is the charity registered?
Double-check that the charity the client wants to donate to is an officially recognized charity, so he or she can take advantage of the tax benefits.
If the client has been approached by an unfamiliar organization, Howe says, it’s especially important to do a little digging.
Tell the client to take a look at the Canada Revenue Agency’s website (www.cra-arc.gc.ca/charities/), she says, to make sure the charity he or she plans to donate to is registered.
4. Do you want to see the results?
If you are dealing with a significant donation, ask your client whether it’s important that they see the results of that donation during their lifetime, Howe says.
If the client does want to see the “fruits of their donations,” she says, work with other experts and the charities themselves to find out if there is any way to show the client the results of the gift.
This is the first in a two-part series on charitable giving. Next: The different types of charitable gifts and tax benefits.