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Keeping tabs on clients' charitable giving

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Once a client has decided to make a donation to an organization, it's tempting to think that the advisor's role in supporting the client's philanthropy is over.

That's far from the case, says Marguerita Cheng, CEO of Blue Ocean Global Wealth in Rockville, Md. Strategies and gift giving can take many forms -- unappreciated stock, charitable lead trusts, charitable remainder trusts and charitable gift trusts, for starters--and "clients need to constantly reevaluate them," Cheng says. That's especially true given that pledges made to charities are often not fulfilled until far in the future.

In some situations, Cheng says, "clients may want to continue to support, expand their support, or reevaluate relationships with nonprofit organizations they have supported in the past." In others, she says, "perhaps the clients' personal situation has changed. Perhaps the organization's programs have deviated from its mission statement."


Other advisors agree with her approach. "I view this like going for your yearly checkup to the doctor," says wealth manager Scott Shellhamer, director of financial planning at Warren Financial, in Exton, Pa. "You don’t want to set it up and forget it because things change constantly. So just as the doctor reevaluates the patient, so should the donor reevaluate his or her options."

"It just wouldn't be wise to set it and forget it, because tax laws change and the environment changes," says Jennifer Landon, president of Journey Financial Services, a wealth management firm in Ammon, Idaho. "Clients might want to reconsider where they're taking the money from in order to make their charitable contributions."
Plus, she says, "Investment values change. When one asset is highly appreciated, the client might have more tax advantages using the appreciated asset."


Ken Nopar, a Chicago consultant who advises wealth managers on philanthropic matters, says that together, advisors and clients should regularly reassess charities, and their missions, and keep an eye out for staff and leadership changes.

"It's important that clients are loyal to the charity and have realistic expectations that their donation may not create the change or impact they envision overnight," Nopar says, "but by remaining in communication with the staff or leadership, understand what is happening."

Bruce W. Fraser is a New York financial writer and contributor to Financial Planning magazine.

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