As clients head into the ‘new normal’ – are you ready to talk charitable giving?

Amid debate around the UK’s response to the coronavirus and timings of lockdown, the one point of near universal agreement is that lives are for ever changed – and for many, so are our priorities.

For many clients, the ‘new normal’ will mean they return to organisations that are struggling, some are shrinking, some will disappear, while most are considering how to mobilise and motivate a workforce which remains largely at home.

We also step slowly back into a world that has a different relationship with our public services, a renewed and in some cases newfound appreciation for frontline workers and a stronger sense of what our local community means to us.

Thanks to the fundraising feats of Captain Tom Moore for NHS Charities Together charities and so many others who have responded to the crisis with a determination to give what they can and support the causes close to their hearts, recovery is also a moment when people are ready to talk about charitable giving. It is, therefore, a moment when those advising them need to be ready to not just pose questions, but to offer knowledge-based solutions.

Is creating a foundation the best route for a client looking to make a large charitable gift? What about using shares for philanthropic giving? Is tax-effective charity somehow tainted? My client pays taxes in America and wants to make a large gift? My client wants to support a cause overseas? My clients want general advice on where their money might do the most good?

These are just some of the many queries that we have fielded over the years from colleagues in the tax advisory community. At the Charities Aid Foundation (CAF) we have a long history of guiding discussions about tax effective philanthropic journeys. Our job is to champion the role that charities play in enriching our lives and our communities. To that end, we support over 250,000 individual donors and 73,000 charities in 100 countries.

From this starting point we are able to tell advisors that these client meetings and discussions are not the time for timidity or shyness, they are the moment for candour. Regardless of the relative wealth of your clients, we have insights to offer into those conversations that not only provide answers, but which strengthen an advisor’s relationship with their client. When talk turns to charitable aims, the world of business gives way and becomes the story of personal interest, of passion for a chosen cause, of future plans for children to become involved in a family’s charitable work.

Charitable tax benefits are not a bad thing, something to be whispered in hushed tones. They are the legal, acceptable benefits that the government has created as a scheme that encourages people to support the causes close to their hearts. Indeed, through Gift Aid, the government has created a clear mechanism for people to divert the money that they would have given to HMRC into the coffers of charities.

In our experience, (U)HNWIs are in a different place today than a generation – or even a decade ago – and there is an increase in the demand for fact-based philanthropic advice for those who want both comprehensive information and personalised support as they seek to fulfil values-based goals.

Philanthropists are increasingly impact-oriented and advisors need to be in a position to help donors to build relationships with the charities they are seeking to support. Gone are the days when philanthropists would write cheques and leave charities to get on with the job.

This trend is no doubt fuelled by the $59bn intergenerational wealth transfer that is set to take place over the next 30 years. Driven by millennials and women with wealth, there is a growing demand for philanthropy and social impact investment advice. Being well-placed to offer this element to the more ‘routine’ advice also provides increased opportunities for professional advisors to cement relationships and expand their client proposition.

For example, a CAF Charitable Trust is a flexible, cost-efficient and easily set up option that takes away the administration and expense of a foundation, retains the ability for anonymous donations and provides tax effectiveness in its ability to donate cash, stocks, shares or other assets. CAF is the UK’s biggest managers of donor advised giving, and donor advised funds (DAFs) have seen incredible growth in popularity in the UK in recent years as clients become increasingly involved in their giving. Does your client need to be aware that if they give HMRC qualifying shares to charity, they receive Income Tax Relief as well as an exemption from Capital Gains Tax? Within a trust, clients receive a chance to grow the funds available to, in turn, give to charity.

For the increasing number of clients who are dual US/UK taxpayers, the CAF American Donor Fund offers a smart, tax-effective way to achieve greater impact with charitable giving and we have just celebrated our twentieth anniversary. With expert support, fund investment opportunities and the ability to claim eligible UK and US tax relief on all giving worldwide, this way of giving has, to date, paid $583m to charities worldwide with the main cause areas being health, arts and education.

As all tax advisors know, beyond the numbers lies a client relationship built on trust, reliability and professionalism. Having a conversation with a specialist charitable giving advisor and having ready answers to some of the questions around how best to give to charity, is a crucial part of a modern advisory toolkit.