Philanthropy Today

One of the things that's really fun for me is to take the processes and systems from a big multibillion-dollar national foundation and translate that down to the individual foundation.

What you're talking about sounds like a lot of services. What are your charges for advisors?

We've developed a fairly simple mechanism in which people get a certain number of hours of my consulting based on the size of the foundation, with additional products and services paid for individually. Most of the foundations–those around the $2 million mark–get two days of my time.

Many advisors hesitate to bring up the topic of charitable giving with their clients. Why is that?

There are a couple of reasons. Obviously, there are some who feel uncomfortable raising the topic if the client hasn't expressed an interest in philanthropy first. But others are not sure of what the right wealth threshold is to bring up the topic. My sense is that many advisors are not familiar with the tools of charitable giving, and they tend to get wedded to one tool or another. They worry that they won't be able to answer the technical questions–the tax matters or the various gift options, what the pros and cons are, and what the costs are.

Most clients do not count on their financial advisor to be absolutely savvy about all planned giving vehicles, but what they do expect from their trusted advisor is to help them think it through. I also think there are advisors who are not comfortable talking about these soft issues, though I do think that's changing.

A good planner has an understanding of what their clients' values are and what they're looking for in terms of life goals, and [addressing] their philanthropic aspirations is a logical part of that.

A lot of higher-net-worth people don't want to give too much to their kids because they fear the negative ramifications, so holding conversations with about charitable giving is a great way, particularly in families with immense wealth, to introduce the kids to things like money management and to show them how the other half lives. It's extraordinary to watch them get involved in these local nonprofits. For many affluent families, philanthropy provides many benefits beyond the tax savings.

How has the level of charitable giving been affected by 9/11, the bear market, and the corporate accounting and Wall Street scandals?

In a way, 9/11 tapped the charitable spirit of America, but the evidence I've seen so far is that it didn't supplant traditional giving. One of the things we did see from 9/11 was that we had younger givers, particularly the 1990s Wall Street crowd that suddenly was rethinking their values and tapping into their charitable instincts. 9/11 made people value the critical importance of the charitable sector in our society, which is unique to the United States.

As for the economy, the needs are up and donations are down, including public funds. When the economy is good, you see a huge rise in philanthropy. In a downturn, it's rough on everybody. What we're seeing is a belt-tightening in all sectors, and overall, generosity has been curtailed, matching donors' smaller portfolios. What's unusual this time is that so many sectors are affected: corporate giving, individual donors, and foundations. The not-for-profit community is really feeling the hit.

But the long-term outlook for philanthropy is extremely positive. Last week, Paul Schervish of Boston College, who gave the original projections of the coming intergenerational transfer of wealth [between $41 trillion and $136 trillion between 2000 and 2050] says overall giving is down but it's not as much as one would imagine considering the recession we've had and 9/11. He's not changing his projections on the intergenerational transfer.

But the demographic changes coming up will have a tremendous effect on philanthropy over the next 10 or 20 years. There are two intersecting trends happening: this massive intergenerational transfer of wealth, and the aging of the population, which is the segment of the population that donates to charity more than any other. The boomers are very different than their parents. They're much more sophisticated about the range of available giving vehicles, they want to be much more involved in their philanthropy, and they're wealthier at a much earlier age. Just as the boomers have reinvented every structure from when they were in kindergarten, there are expectations that they will reinvent retirement as well.