Death is a delicate subject, but with the biggest intergenerational wealth transfer in history underway, the charitable sector is realizing it needs to build bridges with financial advisors as they help Canadians write their wills.
In Canada, it’s estimated that $1.6 trillion will change hands by 2030, as Canadians leave money to the next generation. But not all of that will go to next of kin. It’s also estimated that by 2030, Canadians could allocate tens of billions of dollars to charities, non-profits, and other social causes in their wills.
Those decisions are deeply personal. Across Canada, it’s often financial advisors who are having intimate conversations about where people’s money will go when they die. But advisors are not always talking to their clients about charitable giving.
There may be a disconnect between what advisors are offering and what clients are hearing. According to research conducted in 2013 and often cited in the gift-planning and financial-advisor community, 90% of advisors feel they’ve discussed philanthropy with their clients, but only 13% of Canadians feel they’ve had a fulfilling conversation about philanthropy with their advisors. “That speaks to the opportunity,” says Riz Nathoo, vice president of donor engagement at the Calgary Foundation. “You cannot underestimate the power of a one-to-one conversation between a prospective donor and someone they trust – and that is often a professional advisor.”
When we’re talking about death and money, those are inherently sensitive topics. It requires a high level of relational trust.
Riz Nathoo, Calgary Foundation
“When we’re talking about death and money, those are inherently sensitive topics,” Nathoo says. “It requires a high level of relational trust.” He recommends that those in the charitable sector establish connections with financial planners in order to build bridges – and have the best outcome. “Charitable gift planners, working alongside a professional advisor, can be a really powerful duo for supporting the needs of the donor/client,” he adds, referring to the fundraisers tasked with talking to donors about leaving charitable gifts in their wills, also known as legacy gift planning.
Yet there is often a perceived gulf between fundraisers and advisors. That’s changing, according to those in the industry, as more and more realize the opportunity it presents – for charities, for advisors, and for Canadians looking to support the causes they care about.
Charities don’t want to talk about death with donors, or donors don’t want to talk about it with charities. I’ll talk about death and taxes all day long.
Dan Hague, IG Wealth Management
After all, advisors are on the front lines of sensitive conversations about what will happen to a person’s estate when they die. “Charities don’t want to talk about death with donors, or donors don’t want to talk about it with charities. I’ll talk about death and taxes all day long,” says Dan Hague, an executive financial consultant with IG Wealth Management. “These are topics I’m comfortable with,” he says. “And from the donor perspective, quite often, they don’t want to have those conversations directly with the charity. They want a third party involved.”
Hague is an advocate for financial advisors to be more upfront – and thorough – when it comes to discussing charitable giving with clients. And that’s a benefit to the clients, too, he says. “I can provide that extra layer of not only professionalism, but [can also act as] a third party so they can declare their intentions without committing to the charity themselves – because a lot of people want to explore what it looks like, but they want to do it from a more neutral place before they commit to a specific charity.”
Not only are financial advisors well positioned to have these conversations – it can also be good for their business, says Ruth MacKenzie, the president and CEO of the Canadian Association of Gift Planners (CAGP). “It makes business sense to engage in philanthropy,” she says. “The idea of supporting your clients to give away their wealth is a little counterintuitive. But this can actually be a business development opportunity.”
The current reality
The CAGP has an ongoing awareness campaign called Will Power, a partnership with the CAGP Foundation, with an aim to ensure that Canadians know they can leave some of their wealth to charity. Will Power has a clear goal to raise the percentage of Canadians leaving donations in their wills to 13% by 2030. CAGP says that, if successful, that would mean Canadians would contribute as much as $58 billion dollars to charities, non-profits, and other social causes.
A little more than half of Canadians report having wills, according to the latest CAGP research, though that number increases as people age: more than 80% of Canadians over 75 say they have a will. What they decide to leave in their will – or what options they are aware of – often depends in large part on who they are talking to when they make that will. “Often, it’s advisors who introduce the idea of philanthropy by asking, ‘What would it look like to leave just 1 to 3% of your estate to charity – a small but meaningful gesture that could serve as a powerful final act of giving back?’” Nathoo says.
Often, it’s advisors who introduce the idea of philanthropy by asking, ‘What would it look like to leave just 1 to 3% of your estate to charity?’
Riz Nathoo
That simple question can have a big impact for charities and the work they are trying to do. But not all advisors are yet tapped into this conversation. According to a survey recently completed by CAGP and the Will Power campaign, approximately 40% of people who worked with a financial advisor or accountant in their estate planning never discussed leaving a gift to charity. Fewer than 20% of Canadians learned about leaving charitable gifts in their wills from an advisor. (A full report on CAGP survey findings will be available this fall.)
So how do charities and non-profits get financial advisors to talk to their clients about charitable gifts – either now or in their wills? It’s not about arm-twisting, Nathoo says. It’s about collaboration and networking.
Bridging the gap – between charities and advisors
“So many of the charities that I work with, especially the smaller ones, the fundraiser has to wear so many hats, and they can feel quite overwhelmed because they’re trying to do too much,” Hague says. “Reaching out is the first step and can make life easier for everyone.”
Hague points to direct opportunities to collaborate. Charities can ask him to give casual presentations about tax tools and financial strategies to their donors or prospective donors who may simply want more information the charity isn’t qualified to share, he says. “It doesn’t cost anybody any money. It’s just a bit of time and energy.”
Then there are bigger endeavours. As part of a partnership he has with a local charity, he’s about to embark on something of a roadshow: travelling to seniors’ residences to share financial advice, including about philanthropic giving. That may or may not mean future donations to the charity – or future clients for Hague – but it is investing in building relationships and putting the word out there. “It’s a mutually beneficial agreement,” he says. The message to the audience, he says, is “Here’s one possible charity, a great one that helped set this up. But of course, you’ve got the flexibility to donate to one of the 86,000 different charities” across Canada.
It’s important for gift planners to create and strengthen relationships with key advisors that are investing time and energy into better understanding the philanthropic sector.
Riz Nathoo
Beyond direct relationships, others point to the importance of networking. “It’s important for gift planners to continue to create and strengthen relationships with key advisors that are investing time and energy into better understanding the philanthropic sector, while also continuing to build awareness within the wider community,” Nathoo says.
MacKenzie points to opportunities created by the CAGP network – whether conferences or events hosted by local CAGP chapters that aim to bring together financial planning professionals, fundraisers, and others in the sector. “It’s building connections and bridging between these two elements that are supporting Canadians who want to give to charity – whether it’s from a wealth management or an estate perspective and you’re a professional advising your client, or whether it’s charities talking to donors about how they might give in a more strategic way,” she says. “That’s really what CAGP exists for.”
Benefits to Canadians, charities, and advisors
For Hague, talking about philanthropy with his clients isn’t just good for charitable giving; it’s also good business. “I mean, there’s 108,000 licensed investment advisors in Canada, right? So how do I stand out? What’s my niche?” he says. “I want to make sure that I differentiate from other advisors out there.”
He’s not alone. Research has shown that 82% of financial advisors think talking about charity is good business, and more than 90% think it helps strengthen their relationship with their client and extend their network with their client’s family and friends.
One of the ways for advisors to earn credibility with their clients is the master financial advisor in philanthropy (MFA-P) designation and training available through CAGP, a program Hague describes as “a gold standard in the industry.” Approximately 400 people have taken since it launched, according to MacKenzie.
But often, simply showing an interest in a client’s values – and what causes they might be interested in giving to – can open the door to a closer relationship, Hague says. The benefits, he says, are plenty. “One, you’re building a relationship with clients in ways that they haven’t had before. And two, you’re implementing strategies that help them achieve their goals, and help the charity achieve their goals – and obviously I get compensated for that too. It’s a win, win, win.”
The how-tos of broaching the legacy gift question with donors and clients
While it sounds simple in theory, in practice, talking about philanthropy after death – call it legacy gift planning or planned giving – is tricky. It’s a delicate subject, and one that some would prefer to avoid. At the recent CAGP conference in Edmonton, seasoned experts shared tips and tricks with one another.
Russell James is a professor at Texas Tech University, where he directs the graduate program in charitable financial planning (planned giving). He has long shared insights from research into planned-giving strategies. When talking to someone about a prospective planned gift, it’s essential to not talk about death. “Don’t lead with death!” he said at the conference. Instead, he said, it’s key to use phrases like “What’s important in your life?” Prospective donors, he added, are thinking “Does this connect with my life story?” A planned gift in a will is often deeply connected to the person’s view of themselves when they are alive, and how they want to be remembered.
That can require that financial advisors drill down into their clients’ values. And, for gift planners, coming up with a compelling message is key. “What is the ‘why’?” asked Aimée Lindenberger, a gift planning expert, in another session at the April CAGP conference. “The ‘why’ really is the fundamental reason behind an organization’s actions and decisions. It represents the mission and vision that guides the organization.”
A well-communicated ‘why’ can turn one-time donors into long-term supporters.
Aimée Lindenberger, gift planning expert
“But really, it’s so much more than that, because it’s purpose, it’s what motivates people to join the common cause,” she said. “It’s what motivates people and inspires people. It’s what causes people to want to give. And it goes beyond the methods. It goes beyond the pure actions.” Communicating the “why” to prospective donors is key, she said, suggesting the use of stories, anecdotes, and testimonials to illustrate the “why.” “Personal stories and concrete examples make the ‘why’ tangible and relatable.”
Of course, this is important in any donor relationship. But as Lindenberger pointed out, it can also help open the door to legacy gifts. “The ‘why’ helps create strong emotional bonds between donors and the cause . . . Donors can feel personally connected to the mission,” she said. “A well-communicated ‘why’ can turn one-time donors into long-term supporters. Donors who understand the organization’s ‘why’ are more likely to continue giving.” The key, she said, is “crystallizing the message” to clarify and refine your organization’s message. “When you have a really clear, concise, and easily understandable message, it is more effective and inspiring. And donors will respond.”
“The heart speaks in simple terms,” she added.
The sources included in this article presented at the CAGP conference in April in Edmonton.
