Making a charitable donation is a wonderful act of altruism that anybody can make. Depending on the size or nature of the donation, those gifts can have a beneficial impact on both the donor and the recipient.
Karey Edwards, senior financial adviser with NCA Financial Planners in Mayfield Heights, and Stephen Rudolph, senior wealth adviser at MAI Capital Management in Beachwood, said having a good financial adviser can make the process of gift giving easier and more valuable.
Rudolph said financial advisers can not only make things easier for the client, but they can also help to maximize and allocate their gift giving in better ways. Building a professional relationship is the key to this.
“We would sit down and ask questions, as an adviser,” Rudolph said. “Not to just talk about how their investments are doing, but to get to know the client and say, ‘Hey, are you charity minded?’ Or we might get a copy of the tax return to see how much they give to charity. And some people aren’t charity-minded. But the people that are, we work with them on their charitable plan and how to do so in the best manner so they can get benefits themselves and fulfill their philanthropic needs for charity.”
Edwards shared a similar sentiment, saying although clients can always do this independently, advisers can help to give the best advice and ask the right questions to guide their clients.
“We have the benefit of having a comprehensive view of somebody’s financial picture,” Edwards said. “And so then we can figure out how gifting can be maximized, taking into account how it plays into their tax picture, their retirement plan and their estate plan.”
Edwards said there are a couple of different ways clients can maximize their gifting.
“We can determine how much is available for gifting,” Edwards said. “And that’s usually determined by running over retirement projections and making sure that people have enough to meet their monthly expenses. There might be extra funds that they’re never going to use in their lifetime. And by running that projection, maybe there’s more available to be gifted than what clients really need. And they might not have an idea of what they need for themselves or what they can pass on.”
Another benefit to working with a financial adviser is the utilization of a donor-advised fund. This is like a charitable investment account that allows an individual to have their charitable assets managed by professionals. Although clients can do these without the help of a financial adviser, Rudolph said most people are not aware of the existence of these funds.
“I think most people aren’t thinking about it that way,” Rudolph said. “They say, ‘OK, here’s the gifts I want to make,’ and they get their checkbook out and write a check ... we’ve seen a few clients come to us and had set up these on their own through institutions like Charles Schwab. But with most people, we’re the ones who bring up the idea, and the clients say ‘cool, that sounds like a great idea.’”
Edwards added advisers can have conversations with families that help facilitate the next generation of gift givers, making sure these charitable donations continue for years to come.
“We’ve had examples where, maybe every Thanksgiving, the family will get together and there will be a certain amount of dollars that each person gets to decide where it goes,” Edwards said. “And particularly with parents, they might ask the children to give a presentation about who they want to donate to and why. For the younger generation, it gives them a reason to look into the possibilities, determine how much of those dollars are actually going to the charity for good purposes and it just creates a general good feeling.”