Advisors as Gate Keeper, Door Opener, or Partner for Planned Giving People?

"Financial Advisors Can Be Door Openers to Charitable Giving," by Charles MacClain, PhD, based on research he has done. (Available under "New" on his website, Philanthropynow.com.) Charles comes from the fundraising side. His way of formulating issues (financial advisor as gate keeper or door opener for gifts) reflects the nonprofit's perspective.  Ultimately, I think the big win here is to see advisor, donor, and nonprofits as co-conspirators for the good. Getting to that point requires that each party to this partnership see the world through the eyes of the other two parties, and that each cut the other some slack. The charity has to realize that the advisor works for the family, not the charity, and that if the donor wants to give nothing or to give to some other charity, the advisor can only facilitate. Likewise, the charity and donor must appreciate that advisors are hired, trained, managed and incentivized mainly around what might be called "prudent planning," as opposed to what Tracy Gary calls inspired philanthropy. That is, the advisor has a responsibility to the client to make sure the client, spouse and kids are secure. Finally, the advisor is paid to manage assets and can't do that to the extent the donor gives them away. The donors by the same token have to recognize that if the process is flawed and the results sub-optimal that they have no one to blame but themselves; they are the boss. They lead; advisors follow. If they are passive, or fail to articulate their ideals, they may not like the result. As for the charity, they would do well - very well, I think - to adopt the philosophy of, say, Charles Collier at Harvard, their Senior Philanthropic Advisor, who will say that he has raised more money for other causes than for Harvard, because he instills philanthropic passion, keeps an eye on family dynamics, and works as a peer with advisors. The net result of which is that the donor's total giving during lifetime and at death rises dramatically, and Harvard gets a big share.

Yesterday, I talked with Dan Garrett, who does planned giving for Abiline Christian about this topic. Dan is a CFP, among his many other credentials. He said that when he works with donors he treats them as clients, making sure they do what is right for themselves and their families and all their charities. When they object at the beginning of an interview that they won't give to Abiline Christian, Dan persists by gently saying, "That is fine, let me get your financial information and goals and we will go from there. The main thing is to do what is right for you." On that basis Dan raises friends and funds, and has become a noted figure in the North Texas fundraising community.

So, are advisors gate keepers or door openers for fundraisers? How about partners in the work? On a team the donor leads with proper motivation and education from the nonprofit fundraiser who can build charitable passion, make a case for his or her cause, and earn the respect of advisors by recognizing that this is and must be a team effort. With a flow of clients and work back and forth among advisors, donors and nonprofits, the effort becomes mutual, and satisfying.

To be specific, a client needs, as donor advocate Anne Ellinger notes, three elements in an inspired plan, if they are to give at an optimal level:

1. Financial Plan for Security
2. Gift Plan for Social Impact
3. Legacy Plan for Assets at Death

The second falls mostly to the donor advocate or fundraiser.  The first falls mostly to a fiancial advisor. The third to financial and legal advisors. Making the process flow smoothly from ideals, goals, and objectives, through strategies, tools and tactics, is the challenge. Who starts? Who shunts the materials around?

Nonprofits who want to raise 3-10 times more per donor, and earn donor loyalty, would do well, I think, to ask advisors, maybe on their own planned giving board of advisors, how the moving parts might be coordinated, and who should initiate and hand off how to whom. They might also ask key donors how the process has gone, and how it might be improved. In the end, the key term, I am convinced, is not gate keeper nor door opener but "partner." We (donor, advisors and nonprofits) are partners in the work of helping donors develop a prudent and inspired plan for self, family, and society. Transactions (gifts, bequests, contracts, sales, fees, commissions) come out of a goals driven, relationship-based, planning process that evidences care and concern for the donor whose money and energies are so important for so many. Good advisors will shut the door on anything less, if it threatens to upset the plans in place; and likewise good advisors will facilitate gift proposals that come to them from donors who are themselves clear about their objectives.

Hints for planned giving people:

1. Be like Charles Collier and Dan Garrett in seeing the big picture.
2. Work from overall objectives and full financial facts.
3. Treat the donor as a client, holding the donor's overall interests at heart.
4. Treat advisors as partners.
5. Get really good at the gift plan.
6. Work with advisors to integrate the gift plan into the financial and legacy plan.
7. Think big so donors can give big to realize their own dreams.

Comments

[Sean Stannard-Stockton]

Really great post Phil. It can be difficult for people to take the broad perspective that Collier does, especially if their incentives are misaligned. Harvard clearly "gets" why Collier should be helping donors, even when gifts go elsewhere. We began a discussion about misalignment of incentives at the advisor level and I confess I didn't keep up my side of the conversation.

All advisors deal with the fact that their clients spend money (lost assets under management), but few try to block "appropriate" levels of spending. Too many advisors don't take that attitude with charitable giving. However, what about "inappropriate" levels of giving? Some people might call "Inspired Giving", "inappropriate", but that's because they are trying to maximize financial outcomes, not maximize their clients' joy, "self actualization" or social impact. How do we align incentives so that advisors help clients even when it means lost assets and lost fees? Unfortunately I don't have an answer. At Ensemble Capital, because we have focused on the philanthropic family, we know that helping people give in the best way possible may sometimes limit short term fees, but it maximizes long term revenue because our happy clients make referrals. But few firms are going to focus on philanthropy enough to realize those benefits. I hope that as an industry we can discover ways to realign incentives. I would be the first to embrace a well designed structure.

[Phil]

Right, the incentives are mis-aligned. I think the process has to be donor led, or donor driven. That is the tack I expect to see Inspired Legacies encourage, and I believe other donor networks will follow. Donor is lead partner. Advisor is advisor and partner, but is not entitled to set goals. Not for the advisor to say, "You can't give your money away! I am counting on the basis points to cover my children's education!"