Entrepreneurs are a philanthropic lot—90% of them donate to charity every year, both personally and through their companies, according to a survey by Fidelity Charitable Gift Fund. And 61% of entrepreneurs say just being their own boss makes them more likely to give to charity, and a similar number believes the very act of giving will make their companies stronger in the long run.
“Advisors are really going to benefit from incorporating philanthropy into their discussions with entrepreneurs,” said Amy Danforth, senior vice president of Fidelity Charitable Gift Fund. “Because entrepreneurs are inclined to give, incorporating philanthropy into their plans early on is very important.”
Charitable giving can prove useful building blocks in business owners’ tax strategies—instead of cash, entrepreneurs can donate privately held stock, or, if they take their companies public, they can donate those securities direct to charity rather than cashing them out first.
While charitable giving means losing client assets under management, Danforth said that advisors who help business owners donate are more likely to end up handling those clients’ heirs’ accounts. Advisors who fail to bring up philanthropy, on the other hand, lose control of a percentage of wealthy clients’ assets and miss “the opportunity to me more relevant to their clients’ financial lives,” she says.
However, only 25% of entrepreneurs said financial advisors or other intermediaries help them incorporate charitable giving into their financial plans.