Why Philanthropy Should Matter to Advisors, by Tim Belber

Posted on April 9th, 2015

Four essential conversations advisors should be having with clients ASAP
[I am delighted to share Tim’s essay, which I believe is destined to become a classic. It first appeared on CEG Elite Advisor Reports. See the original online here. ~Steve Meyers]
By Timothy Belber

Key Takeaways:

  • Many advisors greatly underestimate their clients’ interest in philanthropy.
  • Studies show less than half of HNW clients are satisfied with the philanthropic conversations they have with advisors.
  • Helping clients with philanthropic planning gives you an emotional connection with current (and future) generations that goes far beyond traditional tax, investing and insurance. It can also help you retain AUM.

To many advisors, philanthropy is at best a tax strategy or a "check off the box" conversation. It should be far more important to advisors. It certainly is to high-net-worth (HNW) families. As The Philanthropic Initiative 2013 Study on the Philanthropic Conversation found:

Advisors and clients disagree about the focus of their philanthropic conversations. Advisors believe their philanthropic discussions are equally balanced between their clients’ personal goals/interests and technical topics, but most HNW consumers say their advisors primarily focus on the technical aspects of giving, including tax consequences. HNW consumers want advisors to adopt a more balanced approach, focusing on both their personal passions/charitable interests and technical topics. Less than half of HNW consumers are fully satisfied with the philanthropic conversations they have with advisors, likely influenced by this disparity in advisor focus and client desires.

I can tell you from experience that creating a more satisfying experience with families around philanthropy generates real benefits for financial advisors. First, you are connecting with your clients at an emotional level far beyond the traditional tax/investing/insurance premiums level. Second, being involved in true family philanthropy creates the opportunity to get to know and work with the coming generations. Done correctly, a family philanthropy program can be empowering for all family members. Third, as you become involved with your client’s philanthropic interests you will find yourself meeting, on a very favorable nontechnical basis, other families similar to your client. Last, creative philanthropy, as we’ll see, can actually help you retain AUM or implement other financial strategies.

Four essential conversations

How does it start? I have found four conversations useful in helping families think about philanthropy.

1. The Legacy Conversation
Legacy is a word that means different things to different people. The definition I use with clients is simple:

What do you want (your children/grandchildren/someone) to feel, think and say when they hear your name?

That leads to the next questions:

How does your current approach to philanthropy support your Legacy Statement? Should we explore ways to better align those two?

2. The Gratitude Conversation
I often hear statements such as “My children/grandchildren don’t appreciate what they have!" or “I wish my children were more grateful for what I have given them."

In Strangers in Paradise, Dr. James Grubman lays out an interesting reason that so many wealth earners make this complaint: It’s for the same reason I cannot appreciate the freedoms of living in the United States nearly as much as someone who emigrates here from Cuba or North Korea does.

Children (and often grandchildren) of wealth holders do not appreciate what they have for the very same reason we do not appreciate so many things in life: We are born into them.

If you were born in the United States, or in almost any modern country, you take things like electricity, plumbing and the telephone for granted. You have probably had them for your entire life. On the other hand, someone who emigrates from a small remote village in Africa to the United States will marvel at the flush toilet. He or she will look at you and me and say, “You don’t appreciate what you have!"

Family philanthropy can be a way of bringing gratitude to life. A simple gratitude exercise (name three things you are grateful for today) followed by a conversation about how you can express that gratitude through philanthropy is an eye-opening experience for families.

3. The Sustainability Conversation
HNW families enjoy life in many different ways. Being mindful of what it takes to have and sustain that world is another entry point into meaningful family philanthropy. The opening question is, "What about your world today do you want your family to enjoy for future generations?" This is followed by the questions, "Have you ever considered what it will take to sustain that?" and "Have you discussed this with your children?"

Real-world example

The best example I have seen is a family vacation home in a ski resort community. Most families are not mindful of what it takes for them to fly in, enjoy the mountain, eat great food and have an overall wonderful experience. It requires a lot of people who also want good housing, educational opportunities for their children and good health care. Keeping the environment of the mountain pristine is also critical to the experience. Sustaining the family’s overall mountain experience for coming generations requires a commitment from the family to support organizations in the resort community, such as a local scholarship foundation or various environmental philanthropies. I’ve seen families base most of their philanthropic giving around this idea because they see philanthropy as more of a two-way street with returns flowing back to them instead of the old one-way street benefiting the charity alone.

4. The Preparing-Heirs Conversation
It is often a wake-up call for wealth owners when you ask them what is being done to prepare their heirs to receive assets. Philanthropy offers an opportunity to ease into the bigger conversations around wealth and its role in the lives of family members. It can also help restore and support family relationships.

Personalized Philanthropy
In his new book, Personalized Philanthropy and the Four Donors, Dr. Steve Meyers outlines several new approaches to creating impactful philanthropy based on donor goals rather than institutional needs. Having a grasp of his concepts can lead to great results for advisors, donors and charities. Here is a quick example from my own experiences (with names changed).

I met with Pete, a longtime client, to discuss the agenda for our next family meeting. The primary topic was philanthropy and understanding how you uncover your own philanthropic capacity. This was a good-size family: parents (mid 60s), three married children and ten grandchildren. They had a significant family net worth in the range of $750M, mostly illiquid with good cash flow. They had a liquidity event on the horizon, but not anytime soon. I’ve done planning, education, life insurance and a variety of things for them over the past 15 years.

After reviewing my proposed agenda, I asked the family patriarch, Pete, what his current thoughts on philanthropy were. He said one of his dreams was to endow a chair at his alma mater, a great engineering school. I asked what that required, and he replied it would take between $1.5 million and $5 million, depending on the chair. Prior to learning about Dr. Meyers’ ideas, my response would have been that we should add that sum into how we plan for the liquidity event.

But I asked Pete if he was familiar with the “spend rate" on endowments. He said he was and that he understood it to be between 4 percent and 5 percent. I was surprised he knew about spend rate, and he commented it was because of the number of boards he sits on. So I laid out the idea of a virtual endowment with annual gifts of $60,000 to $70,000, followed by a "completion gift" from the liquidity event or from his estate—all formalized in a “pledge agreement."

Pete loved the idea and said it would give him “great joy" to be able to see a chair from his family sooner rather than later. He was able to hold onto the principal in an investment account while getting the satisfaction, impact and recognition he desired.

Pete is setting up lunch for the foundation president and me to talk about the power of alternative strategies to improve giving and donor satisfaction. He also wants to talk about some of the other causes he is involved with to see how I may be able to help donors to those causes.

To me, this underscores the importance of financial planners, estate planners and other family advisors gaining an understanding of family philanthropy in general and personalized philanthropy in particular. It is putting me in front of the families I want to talk to and is helping important causes sustain the vital work they do.

About the Author

Tim Belber, founder and principal of The Alchemia Group in Denver, focuses his practice on helping self-made families align the power of their financial assets with their long-term goals for flourishing as individuals and families across generations. Tim has degrees from the Wharton School and Seton Hall University School of Law and is an Accredited Estate Planner (AEP®). He is the author of the forthcoming book, The Middle Way: Using Balance to Create Successful Family Wealth Transition Plans.

There's more on personalized philanthropy ... See the article online here

Partner and Monetize: Staging Your Gift with Personalized Philanthropy (you really should read this)

Posted on April 5th, 2015


The case Phil Cubeta makes for advisors to look into Personalized Philanthropy begins with self-interest (AUM) … and goes well beyond.

Why Charitable Gifts of Non-cash Assets- The Business Case for Investment Advisors

Philanthropy and AUM

Often investment advisors are held back in serving the client's philanthropy by the fear, partly justified, that the gifts to charity, if significant, will come at the expense of assets under management. As discussed in a prior post, however, we are on the cusp of a major historical opportunity to help Boomer business owners in transition from success to significance, and also greatly increase and retain assets under management.



The Grail Challenge: Go "Slightly Viral"

Posted on March 28th, 2015

To go just “slightly viral" is our loftiest goal. Personalized Philanthropy will never be a mass phenomena, but many donors would embrace the grail challenge to have their impact and recognition start now, if they only knew they could. If you have read Personalized Philanthropy, please make your voice heard by writing a review or comment.

Embrace the challenge
If you work in the fundraising software industry, the challenge is to bring the complete donor alive - the institutional-focus and the donor-focus. If you’re a gift officer, the challenge is to bring creativity back to your practice. If you are a financial or estate officer, your challenge is to go beyond the convention in your industry and “to do stuff," as the cleaned-up version has it. And if you’re a philanthropist, your challenge is simply to start it up, now.

Personalized Philanthropy: Crash the Fundraising Matrix



Blue Screen

Posted on March 8th, 2015

It’s Fundraising’s Blue Screen of Death
Why Bother to Crash Your Matrix?
As Morpheus says to Neo in the first episode of The Matrix,
The Matrix is everywhere. It is all around us . . . . Unfortunately, no one can be told what the Matrix is. You have to see it for yourself.
But don’t fall into the trap of thinking you are powerless to act.
You can learn and act!
When you have crashed your matrix, you can become a boundary-spanning gift officer. You can help lead your development office towards a holistic, donor-focused philanthropy system. You can learn to:
  • Rise above the culture war between institution-focused and donor-focused fundraising.
  • Design and shape gifts to mesh compelling interests with compelling need.
  • Deploy personalized philanthropy's three killer apps for good
  • Realize the holy grail of fundraising: immediate donor impact, lifetime recognition and satisfaction
  • Structure engagements utilizing a personalized gift design process to move beyond conventional solicitations.
  • Make sense of your numbers for the people who count.
  • Renew creativity in your own gift planning practice and help lead your development team to donor-focused giving
Just one donor’s excitement about this new way to give-with-impact-now can spark the change and be the catalyst for organization-wide awakening.
Buyer Beware: Throughout your reading you’ll have to keep in mind that it is somewhat inevitable that this book is as much bio as it is info. I hope you will enjoy this book and use it to crash through your own fundraising Matrix. It’s not so difficult. You begin with yourself.

Personalized Philanthropy: Crash the Fundraising Matrix

Matrix has landed!

Posted on March 2nd, 2015


Using a metaphor of an imprisoning Matrix—the typical development office with its goals and deadlines—Steve Meyers has finally broken through the linguistic and strategic logjam to make sense of connecting donor and charities in a way that will, and already does at some organizations, change the way money is raised.
Personalized Philanthropy: Crash the Fundraising Matrix
Engaging donors for impact and recognition now.
We can show you how.
Charity Channel http://bit.ly/personalized-philanthropy
Use Order code personalized-philanthropy for a 25% discount and free shipping







Everyone has a plan, until they are punched in the face

Posted on February 19th, 2015


What do donors have in common with Mike Tyson? What advice from donors do advisors frequently overlook? Investigate deep thoughts such as these, in the Three Pillars of Personalized Philanthropy.

Coming Soon - the matrix crashing near you.

Posted on January 18th, 2015



I don’t usually talk about this, but I didn’t want you hearing about it from someone else, and you are certainly entitled to know.

This book is actually happening soon. I don’t know when precisely, but it’s very soon. I saw the press it will be printed on. It exists; it’s almost ready, except for the Index.

Friends, colleagues, and donors seeing my crazy ideas and presentations evolve had been telling me to write the book on blended giving, or if it’s more than that, whatever it is I’m calling it. It was, like, put up or shut up. Ship or go home.

Look. We've done a lot of proof of concept and reality-testing over years and years. We’ve built a lot of gifts together that would not have happened otherwise. With impact and recognition beginning right away. Telling your story is only a beginning on thanking you.

Isn’t all philanthropy already personalized? No! I laughed you off, but in the back of my mind, I thought: mmm. Should I write it? Could I? Would it matter? Then, Stephen Nill of Charity Channel Press, asked me to. I just couldn’t say no. Two years have passed since I began; it’s only just one year since I even told you, or anyone else, about it.

And so, Personalized Philanthropy will begin crashing a matrix soon, hopefully near you. Ultimately, if you don’t ship your work, you didn’t do it. right?

If you want to hear more about the book on personalized philanthropy, let me know. I’ll keep you posted as it’s happening. Let’s just see where this goes.

Warmest regards,

Steve

Personalized Philanthropy: Crash the Fundraising Matrix
Engaging donors for impact and recognition now.
We can show you how.
Charity Channel http://bit.ly/personalized-philanthropy
Use Order code personalized-philanthropy for a 25% discount and free shipping


Att: Nashville Cats! Major and planned gift officers. No one can tell you what the Matrix is. But you can find out for yourself. In Nashville. January 14, 2015.

Posted on December 23rd, 2014




Great line-up of authors and presenters and the blended audience of grant writers, major and planned gift officers is amazing. If you are in the Nashville area, let’s meet up.
See the pdf flyer for details.





How Personalized Philanthropy Can Benefit You and Your Clients

Posted on November 18th, 2014

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On November 4, 2014, I was so privileged to be interviewed about personalized philanthropy by Tim Belber for the Purposeful Planning Institute. Have a listen (mp3 file) and read their summary. Steve Meyers

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How Personalized Philanthropy Can Benefit You and Your Clients

Audio File: Download/Play Recording (MP3)

Date:
November 4, 2014

Guest Speaker: Steven Meyers, Center for Personalized Philanthropy at American Committee for the Weizmann Institute of Science

Downloads:

Summary: In this session Tim Belber, PPI Dean of Arts and Practice, leads an interactive conversation on personalized philanthropy with Steven L. Meyers, Vice President, Center for Personalized Philanthropy at The American Committee for the Weizmann Institute of Science.

Steve is a primary developer of personalized philanthropy, based on his mantra of “the right gift, for the right purpose, for the right donor." Steve’s innovative donor-focused gift designs, especially a series of arrangements he calls “killer apps," combine the full spectrum of current and future gifts so that donors can create a lasting legacy where impact and recognition are able to start up right away. By using Steve’s concepts in conversations with client families, advisors of all types will be able to enhance and expand how families view and act around philanthropy.

Important Points:

  • Personalized philanthropy is a donor focused approach to philanthropic planning, versus a planning process that is driven by organizational needs and pre-determined giving styles and tools.
  • Steven promotes a “radical rethinking" of the relationships between annual, major gifts and planned giving campaign managers and the donors that fall into those categories to move towards a giving that transcends these silos to serve the real interests of the donors.
  • Three new tools that Steve has developed (“killer apps") are individually tailored virtual endowments, equity-building philanthropic mortgages and gifts that step-up their scale of impact over time. Together, they form the basis of a new discipline – a holistic practice that spans the traditional boundaries of financial and philanthropic planning.
  • Steven has developed a series of 6 articles (Personalized Philanthropy and the Four Donors) that advisors can use to begin conversations about personalized philanthropy with their clients.

Reading Recommendation: Personalized Philanthropy: Crash the Fundraising Matrix and Make the Real Shift to Donor-Focused Giving by Steven L. Meyers

Purposeful Quote: Now is the time for you and your clients to think about exactly how are you going to connect that social capital you’ve created to real societal change.

Introduction to Our Guest Speaker

Steven L. Meyers, Ph.D., is Vice President of the Center for Personalized Philanthropy at the American Committee for the Weizmann Institute of Science. Steve is a primary developer of personalized philanthropy, based on the mantra of “the right gift, for the right purpose, for the right donor." Steve’s innovative donor-focused gift designs, especially a series of arrangements he calls “killer apps," combine the full spectrum of current and future gifts so that donors can create a lasting legacy where impact and recognition are able to start up right away.

Steve joined the American Committee of the Weizmann Institute of Science in 1995 and now serves as Vice President of its Center of Personalized Philanthropy, as well as a member of its management team and total financial resource development strategy group. He holds a Masters Degree in Organization and Management from Antioch University and a Ph.D. from the University of Buffalo.

Steve has published in The Journal of Gift Planning and speaks frequently at national and regional gift and financial planning events on donor-centered giving and “Planned Giving in the Big Picture." He is a contributing author for the Planned Giving Design Center, as well as for the Elite Advisor Forum of CEG International.

Steve strongly believes in building a pioneering culture of teamwork and collaboration and most enjoys helping donors realize ways they can help make miracles happen at the Weizmann Institute and other organizations close to their hearts. He is the author of the book, Personalized Philanthropy Crash the Fundraising Matrix and Make the Real Shift to Donor-Focused Giving, and Personalized Philanthropy, and its companion monograph for donors, Personalized Philanthropy and the Four Donors: Parables for Radically Rethinking Your Philanthropy: A New Conversation for donors, gift officers, and advisors.

Your Partner In Success,

Julie Dorosz

Purposeful Planning Institute

(303) 256-6300 office; (866) 509-0498 fax

julie@purposefulplanninginstitute.com

www.purposefulplanninginstitute.com


Steven Meyers

Personalized Philanthropy. For both fundraisers and philanthropists. When we say we want to get it right, what do we mean? “The right gift, for the right purpose, for the right donor.” It's about innovative donor-focused, individually-tailored giving strategies -- new gift applications that combine current and future gifts, so that donors can create a lasting legacy where recognition and impact begin now. To make miracles happen at charitable organizations close to their hearts. ~Steven L. Meyers, Ph.D., Center for Personalized Philanthropy