The collision of the dark side and the light side

The War for Donors’ Assets Wealth managers get paid for

“assets under management.” Nonprofits get paid, literally, by

transferring assets away from wealth managers.

So wealth managers actively resist their clients’ philanthropic impulse.

Are wealth managers the dark side?

Wealth managers are winning

2008 Bank of America Study of High Net-Worth Philanthropy, conducted by The Center on Philanthropy at Indiana University

Why do donors stop giving?

2008 Bank of America Study of High Net-Worth Philanthropy, conducted by The Center on Philanthropy at Indiana University

A little bit of math…

Many wealthy, retired clients spend 5% of their assets each year. On average they give ~8% of their income. So they give ~0.4% of their assets.

This should be a non-threat to wealth managers.

Wealth managers should be more interested in the “money in motion” that occurs during philanthropic planning.

Philanthropy: Investment or Spending?

Is it appropriate for wealth managers to address philanthropy? 80-85% of Americans give to charity. Wealth advisors should not convince

clients where to give, but they must help clients achieve their financial goals – including their philanthropic financial goals.

Donors who engage in financial philanthropic planning can give at the same level, but lower after tax cost, or increase giving without increasing after tax cost.

Philanthropy: Customer Service or Business Development?

Donor Advised Fund Assets (in $ Billions)(excludes $12.1 billion in distributions)

Number of DonorAdvised Funds

Source: The National Philanthropy Trust: Donor Advised Fund Market, 2008

Supply Side Philanthropy

The New Physics of Philanthropy Financial Advisors shift from

“Goalkeepers” to “Guiding Stars” Demand Side Philanthropy

Fundraisers convince donors to give Supply Side Philanthropy

Fundraisers convince donors they are the best organization to support

Demand Side Philanthropy

Supply Side Philanthropy

Financial Advisors as Enablers Not Bodyguards

Wealth Managers are Failing Their Clients As philanthropy moves from Demand

Side to Supply Side, advisors who do not shift begin blocking their clients’ goals.

Sabotaging their clients’ desired use of resources should be considered a failure of fiduciary duty.

But fiduciary duty still requires the advisor to be loyal “to the client”, not to the public.

What to Expect from Wealth Advisors Don’t expect to get referrals from

wealth advisors. Don’t expect wealth advisors to

initiate philanthropy conversation. Do bring wealth advisor into the

philanthropy conversation ASAP. Do be ready to describe

philanthropic planning, NOT planned gifts.

Turning Major Donors into Philanthropists Major donors are big givers,

philanthropists are smart givers Turning a major donor into a

philanthropist is like closing a “giver” instead of just a “gift”

Tactics Reject cash gifts over $10,000 Help set up foundations and donor advised

funds Approach foundation funders about

restructuring grants – help them understand themselves as “equity investors”

Wealth Managers Can be Brought to the Light Side

Darth Vader?!