For several years now, I've been discussing philanthropy with my clients. It began, not as something I intended to become a regular part of my financial planning process, but as a natural conversation with clients as we explored ways to gift assets to charitable entities for tax-saving purposes. Although initially focused on what, when and how to give, those conversations eventually gave way to talking about the root reasons that my clients are charitable. I would like to share how this approach has changed my clients' perspectives about giving while it has enhanced my relationship with them and the members of their families.

The Benefits

As a financial advisor, it's important for you to recognize that charitable giving is a consequential part of many of your clients' lives. Since financial planning incorporates all the things that your clients can do with their money, philanthropy planning should be another aspect in the overall planning process.

But what exactly is philanthropy planning, and how is it different from charitable giving? In financial terms, philanthropy planning can be viewed as an investment in a cause, with the expectation that the result (return) will be achieved. Charitable giving through philanthropy planning begins with an end in mind.

Philanthropy planning provides an opportunity for the advisor to add real value by helping clients and their families help others. By addressing why clients want to make charitable contributions and what they hope those contributions will accomplish, you develop a deeper, more personal relationship with them. You have a rightful share of the "goodwill" created when your planning efforts lead your clients to accomplish their intended charitable goals. And, nothing proves your objectivity more than helping your clients give money away.

What Lies Within

Broaching the subject of your clients' philanthropic values is easier than you might think. Just as you prepare a financial plan with your clients' assets and goals in mind, this process can be applied to their charitable giving. For my clients who were already gifting appreciated assets or had established charitable entities, I began by asking them what they wanted to accomplish through their giving. For other clients, I simply asked if they wished to have charitable giving as part of their financial planning process. In either case, once a client establishes their desire to give, the advisor is able to lead them through a discussion that, in the end, will provide them with a purpose for their giving and a much greater sense of how their dollars can affect change.

Recently, I had a discussion with a couple who love animals and wanted to help in a more meaningful way. By asking where they saw a true need, their answers revealed their strong motivation to educate people about the cruelty of animal abuse. Our conversation sharpened the focus of their philanthropic efforts, and became the basis for how much they wanted to give, and what types of charitable programs they wanted to support.

This values-based discussion ultimately led the couple to develop a program to educate children about animal cruelty. They wanted to start by bringing this program to their local schools and eventually expand to schools nationwide. This couple, who had always given generously, is now even experiencing a greater satisfaction by working with others who share similar passions. They see first-hand the effects of their generosity, far more than they ever did by simply writing a check.

The idea of passing on a charitable legacy is not new to the very wealthy. These families have a long tradition of establishing family foundations and championing causes. Yet, as more and more individuals are achieving wealth, many parents want to model a moral legacy in which their children learn that living a life beyond material possessions leads to another kind of riches. Passing financial wealth on to children is no longer the only goal.

Charitable giving discussions with some of my clients have led them to want to involve their family members in the philanthropic planning process. For example, one client asked his college-age daughter how much she thought the family gave to charities each year. The daughter guessed a few hundred dollars, when in fact the amount was closer to $20,000. Since his children were not involved in the family's charitable giving decisions, these generous gifts had no impact on them. I suggested that his family come together and create a family-giving mission statement.

Family Giving

The purpose of the family-giving mission statement is to bring family members together to define the philanthropic goals of the family. Once complete, it states what the family's collective giving, whether money, time or both should achieve. Families who want to have a more significant and lasting impact realize their family-giving mission statement must be more than just rhetoric. It should be meaningful to each person and give a purpose to the family's shared philanthropic endeavors.

In working with my clients' families, it became clear that the process of developing the family-giving mission statement was just as important as the final declaration. In some cases, this may be the first serious money discussion that parents have with their children. By looking beyond each individual's own self-interests to decide on a common philanthropic mission, the relationship between family members is strengthened. And since the financial advisor is leading the values discussion, he or she also gains a closer relationship with clients, their children and extended family members.

Specific Objectives

To determine a unified goal, I arrange a family meeting to explore each person's passions. I probe their individual philanthropic interests to reveal which causes are most important and which are held in common by asking a series of questions:

• If money were not an issue, what changes would you like to see happen
• If time were not an issue, how would you volunteer?
• What challenges in your community or in the world do you care most about and want to improve?
• What impact do you want to have by focusing your efforts on these challenges?

I try to avoid questions about past giving; instead I focus on the family's values. More times than not, their mission statement leads them in a new direction. Whatever questions an advisor develops to facilitate the discussion, it's important to move from broad ideals to specific objectives. Once all of these objectives are known, the family's next step is to find common ground. Are there any goals that can be easily combined? Do any goals have an urgent, more immediate need such as a recent natural disaster? Do any goals require a collective effort to be achieved?

During these discussions, I am often surprised by the strong feelings expressed by a son or daughter for a particular cause. Many parents are not aware of how deeply a child may feel about helping a particular cause prior to the family-giving mission statement meeting. In these situations, I encourage the parents to follow the lead of their child. It's important to remind parents that it will be the younger family members who will decide whether to continue a legacy of philanthropy when their parents and grandparents are gone. Fortunately, I have rarely seen my clients disagree with their children's charitable goals. Generally, I have been pleasantly surprised by the maturity and passion of this younger generation as they participate in philanthropy discussions.

Since each family is unique, their discussions as they decide on a common family-giving mission can yield surprisingly distinct results. One family with whom I worked had lost a mother to lung cancer. This experience centered the family-giving mission statement on finding a cure for this disease. Some family members devoted their energies to raising funds, while others were motivated by memories of the suffering they had experienced, and elected to provide support and comfort to families experiencing a crisis. Both activities helped to advance the family's mission statement, yet still allowed family members to participate in personal ways.

Another family with several children wanted to acknowledge each child's philanthropic goals. They also wanted the children to experience both leading the charge for a cause and how to be a supportive follower. They decided to adopt a new philanthropic goal each year, a decision their family-giving statement reflected.

In financial planning, your clients' overall goals may be similar (i.e., retire with enough money, or put their children through college, etc.), yet how they achieve these goals is distinctly unique. This is also the case for philanthropy planning. Each family will bring their individual experiences, passions and talents to the planning process. One thing that I encourage all clients to do is to frame a copy of their family-giving mission statement as a visual reminder of their collective commitment to their family's philanthropic cause.

Once a family has a philanthropic identity, the next step is to identify organizations that have similar charitable goals. To start, I provide the family with reputable websites that list national and local charities such as Charity Navigator, the Better Business Bureau Wise Giving Alliance or a community foundation. Once they've developed a short list, I encourage them to call and speak with the organization's director and board members. I also lend support by reviewing a charity's Form 990 and, if they want, I assist them in the selection process.

During our financial planning discussions, we determine what amount they want to give and what they can afford to give. From there we arrange meetings with an accountant and estate planning attorney as necessary to establish charitable entities and discuss charitable tax planning strategies.

The Results

Much like a portfolio review, I meet annually with philanthropic families to evaluate the progress they've made in fulfilling their family-giving mission statement. We look at a number of criteria, including what they gave, where they gave and what evidence they have that their dollars have made a difference. As we review the progress of the family's charitable giving, my clients often find new ways to re-energize their giving efforts or discover new areas of need in which to become involved.

What defines a successful family-giving mission statement? For the advisor, helping clients in an area of finance that is personally significant to them is a worthwhile accomplishment. By working closely with other family members, the advisor is privy to information about the family dynamic that could affect other areas of financial planning.

Clients benefit from working with their families to decide on which causes they want to support. Spending time together and putting their money to work on family causes also strengthens the bonds between parents and children of all ages. When a father suddenly has something in common with his teenage daughter—a reason to work together on a cause they care about—they forge a connection for a lifetime. It may sound corny, but by helping families and encouraging philanthropy planning, advisors do have the ability to make the world a better place.

Barry Glassman, CFP, is a senior vice president of Cassaday & Co., a registered investment advisor in McLean, Va. For more information, visit www.cassaday.com.