Many high net worth (HNW) Canadians are once more focused on philanthropy, according to a report by Toronto-based BMO Harris Private Banking, and as such advisors need to think carefully about their charity-related conversations with clients.
Advisors often make the mistake of focusing on the tax benefits of charitable donations during client conversations rather than the person’s reasons for giving, says Marvi Ricker, vice president, managing director, philanthropic services, BMO Harris Private Banking, in Toronto.
“Advisors need to make the assumption that the client is interested in the issue and is trying to support a cause that’s important to them,” she says, “rather than just looking for tax relief.”
Once a client has made a firm decision as to how much he or she intends to give to a favourite cause, says Ricker, advisors can then discuss how best to make the donation with taxes in mind. For instance, donating publically traded securities instead of cash.
According to BMO’s report, almost three-quarters of affluent Canadians are now donating at the same level they were before the recession. More specifically, 48% of survey respondents say they are now donating the same amount as they did before the recession while 36% of participants claim to be donating more.
In terms of where affluent clients are donating, the report found the top three causes supported by HNW individuals were health programs and disease research (72%), children’s charities (38%) and local community programs (36%).
When deciding on which cause or causes to give to, advisors have a role to play in helping clients stay focused with their philanthropic goals. Ricker suggests advisors help clients get the most out of their charitable donations by helping them to pinpoint a few select organizations to give to instead of donating to a multitude of different causes.
“Writing cheques to causes doesn’t connect you to the issues and you don’t really feel that you’ve made an impact,” says Ricker. “You have to decide who you are, what your values are and how you’re going to translate those values through your charitable dollars.”
Results for the report were gathered from online surveys of 305 Canadians and 482 Americans with $1 million or more in investible assets conducted by Pollara between March 28 and April 11, 2013.