In order to be a member of the Philanthropic Advisors Network, I pay my dues to the National Committee on Planned Giving.Accountants reading this article may also be members of this group, which provides both educational programming and ethical standards for those who work in this field. Those who belong to the NCPG know that one of its major themes is "Leave a Legacy."
The idea is that those who make bequests and other deferred gifts can make a long-term impact not only on the beneficiary organization, but on their descendents as well. This legacy is supposed to be a point of family pride and unity.
It's surprising, then, to read a recent report conducted by the Indiana University Center on Philanthropy for the Bank of America called the Bank of America High-Net-Worth Philanthropy Study.
The results seem to refute the whole legacy concept that the NCPG has been promoting for nearly two decades.
For 86 percent of the respondents, the idea of "giving back" is more important than "leaving a legacy." In fact, just about 26 percent of respondents cited "leaving a legacy" as a motivator for their philanthropy.
There is only a very small group of mega-wealthy individuals who inherited their money. Much of their wealth is measured in what they control through past legacies deposited in family foundations. Members of the Rockefeller and Ford families are still intimately involved in the policies of the foundations that bear their names.
Most high-net-worth individuals are self-made. They worked hard to make the money and they appreciate the institutions that helped them along the way. Indeed, the report shows that entrepreneurs are the most generous donors. Take two who have been in the media recently - Bill Gates and Eli Broad.
As an accountant, your principal concern for your client is taxes. Are taxes the principal concern of your client when deciding to make a major gift?
Many in the nonprofit sector have been deeply concerned about the impact of the proposed estate-tax repeal on giving. Evidently, high-net-worth donors do not share this concern, since 56 percent of those who responded to the poll said that their giving would remain the same regardless of the existence or non-existence of an estate tax. Even the deductibility of charitable gifts is not a major factor in the minds of nearly 52 percent of these wealthy donors.
Two factors seem to make the difference in the decision of high-net-worth individuals to make big donations: being asked, and their emotional connection to the charity.
Who asks is an important part of the response. If it's a trusted associate, an admired family member or a respected peer in the community, the amount of money finally given may be substantial, especially when compared to a direct mail or telemarketing request. Remember those words: trust, admiration, respect. They're emotional words.
The emotional connection to the charity was the other deciding factor. How is that emotional link created? With their indelible imprints on our early lives, religious and educational institutions certainly have a head start on many other causes.
But the survey showed an amazing correlation between a person's volunteer hours and the dollars they donated to the same charity. Roughly $620 dollars were donated per hour for those volunteering up to 50 hours per year; the figure jumps to $927 at 100 hours of volunteer time. Volunteering is the best way to make that emotional connection by developing an experience of trust, admiration and respect for the organization itself. It allows the individual to see the inner operations and feel the spirit of the organization.
All of this still does not deny the reality that some wealthy persons still do want to leave a legacy of some sort. This was cited as a motivator by 26.1 percent of those in the BoA study.
The forms that a legacy can take are still numerous: The family name on a summer camp cabin. An endowed scholarship fund at their alma mater. A family foundation that will continue to reflect long-held values.
How and why are your high-net-worth clients giving to charities? Do they compare to the profile drawn in the Bank of America report? Remember, very few of their giving decisions are made on the basis of their tax deductibility.
It's your job to remind them of this part of their finances, but the decision is ultimately in their hands.
Doris Rubenstein is principal consultant of Minneapolis-based PDP Services and the author of The Good Corporate Citizen: A Practical Guide (John Wiley & Sons, 2004).
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