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You are generous. Your clients are generous. The non-profits in your area are world class at cultivating donors, asking for large contributions to worthy causes. You’ve helped get your retired clients into a position of financial independence. They have enough assets to hopefully last their lifetime, but not if they insist on giving big chunks away. How can you help your clients without being “The Grinch that Stole Christmas?”
1. Establish a charitable giving budget. Your client might think of their pool of assets as “money in their pocket.” Remind them they might need it someday. If the stock market has a couple of back to back down years, that “pocketful of change” just developed a hole.
Your suggestion: Agree on an amount they will give each year. Gather up the appeals and proposals they have received. Let them determine how the pie will be shared.
2. Pledge money over time. Your client might be able to better afford a smaller amount paid over three to five years instead of one big check written today. Most capital campaigns have that provision.
Your suggestion: Ask them to explore options how the amount can be paid over time.
3. Matching gifts. Your client worked for a big corporation. As an employee, they might have been eligible for matching funds if they gave money to charity. This benefit might extend to retirees, depending on the firm.
Your suggestion: Ask them to get in touch with their former employer. Does the contribution match continue into retirement? They will need the paperwork. Your client tells the charity their gift level, how much the client will pay and how much their firm will match. Charities have people who follow up on those matches.
4. Setup a foundation or donor advised fund. Charitable solicitations are often made person to person. If your client setups up an arms length entity, they can make the case funds come from there, not their own pocket. The charity sends a written proposal. The entity, often the client, responds.
Your suggestion: Setup this arm’s length arrangement. They choose how to fund it and when. In some years they get few requests. In other years, they get many.
5. Donate securities with a low cost basis. This one’s obvious. If they sell stock and take a profit, they are likely contributing a smaller amount because they need to set aside some money for taxes. If they donate the stock to the charity, they get credit for the entire amount.
Your suggestion: Identify certain stocks ahead of time as ideal candidates if the need arises.
6. Donate hard assets. Your client might own a vacation home they rarely use. It’s not producing any income. It comes with carrying charges. Donating the property to the charity might enable them to make a large gift. The charity sells it off.
Your suggestion: What hard assets aren’t they using? What are they worth?
7. Provide a bequest. Remember the charity in your will. Most charities are fine with that. They know they will probably get more with that approach then they would take in asking for annual gifts.
Your suggestion: Suggest your client remember the organization in their will. This should be non binding, in case they change their minds.
8. Make them a life insurance beneficiary. This is similar to the above idea. It cam make very good sense if the client has few heirs or their descendants are already financially independent.
Your Suggestion: Your client should review their beneficiaries periodically.
9. Gift them a fully paid life insurance policy. Here’s a way they can get their money now! Your client gifts a policy to the charity. They can choose to hold it or sell it to access the accrued cash value.
Your suggestion: Does your client have some small policies that aren’t critical to their overall estate plan?
10. List them as an IRA beneficiary. This is similar to the life insurance beneficiary idea. The money is still available to your client in case they need it. The charity waits until the client has passed away. In some cases, the client might need the money.
Your suggestion: How would they feel about adding the charity as an IRA beneficiary?
11. Look at charitable gift annuities. This is one of several estate planning techniques that give both the client and the charity something. They will have staff members who can provide options. You are likely qualified yourself and offer these products at your firm.
Your suggestion: Discuss their financial situation, the degree of their commitment to act immediately and their need for income in the future. Your firm likely has other professionals with experience in this area.
12. The challenge grant. Here’s a way they can do good while also asking the charity to extend some extra effort for a good cause. Your wealthy client pledges a generous amount with the condition the charity raise an equal amount from other donors to match it.
Your suggestion: Mention the challenge grant idea. They have likely seen it before, perhaps even been a donor.
Giving doesn’t have to be a zero sum game. Your generous client can support worthy causes without always depleting their base of income producing assets.
Related: Getting a Larger “Share of Wallet”