Encouraging Strategic Generosity
Strategic generosity is a deliberate and purposeful approach to philanthropy. It involves thoughtful planning and consideration of the impact of one's generosity, both on the recipient and the giver. Unlike a more opportunistic giving approach, strategic generosity is at once intentional, systematic, consistent, and energizing. Suzanne Shier is Of Counsel at the law firm of Levenfeld Pearlstein and Adjunct Professor LLM Taxation at Northwestern University School of Law. Shier leverages her legal expertise, extensive experience helping high-net-worth clients make informed decisions about their charitable giving, and her personal journey, enabling clients to realize tax benefits while creating a lasting and positive impact on their communities and chosen causes, as well as their families. We spoke recently about her views on strategic generosity and the role of financial advisors.
Strategic generosity was modeled for me early in life. I was blessed to have been raised in – and then married into – a family where giving was a habit of daily living. My family showed me that you do not have to wait to have a certain level of financial security before you live generously. My uncle, parents-in-law and others in our family were giving from the very early stages in their careers. They never advertised their giving. It was just part of their DNA. My husband and I have tried to share that with our children.
The book "The Paradox of Generosity" describes the counterintuitive nature of generosity. Those who give selflessly often benefit in return – enhancing their own well-being, security, and sense of purpose. Unfortunately, when you look at what is happening with U.S. philanthropy, you see a downward giving trend.
Recent research shows that charitable giving by individuals has been declining for decades – with the percentage of households donating to charity falling from 66% in 2000 to below 50% in 2018 and has remained below pre-recession levels in the years since. We went from philanthropy being a clear cultural norm to a diminished priority in less than one generation. To me, this is a call to action. The trend creates a unique advisory moment, and I am really embracing that.
Facilitating strategic generosity with your high-net-worth clients begins with three basic principles: find the passion, simplify, and don’t wait.
Principle 1 - Find the Passion: Start by just having a conversation with your client about their interests and goals. Don’t begin by talking about tax strategies. Start with the stories. Start with their passions. Everyone can think of something they really care about and to which they may already be giving. Ask what specific charities or causes they already support. Ask what they think the role of charitable giving should be in their overall wealth plan and what they hope to achieve through giving. You might ask how they want to engage their family in their charitable giving. Once you understand interests, passions, and values, you should be able to match an appropriate strategy to your client’s goals – and the strategy is going to make a lot more sense to them.
Principle 2 – Simplify: Simplify the charitable giving and the planning process for your client – no matter how financially sophisticated they may be. Just putting strategic generosity in context for them makes all the difference because none of this is intuitive. Most clients have no interest in the strategy. They care about the outcome. We're interested in the strategies. Often, clients are intimidated by what they see as complex charitable giving techniques that are beyond their reach. We need to help them see that there are many easy options to be strategically generous. Donor-advised funds, for example are accessible, flexible and have so many advantages. Keep it simple and straightforward.
Principle 3 – Don’t Wait: Often people think of philanthropy in terms of deathbed giving through wills and trusts. We need to shift the mindset about generosity from something a client does with what's leftover in their estate to something they do to build their legacy and make an impact during their lifetime. I often hear the term “multiplier effect” used these days to describe the short- and longer-term change donors want to affect through their giving. They can’t watch those benefits unfold through testamentary giving. Think “live to give.”
My advice for wealth management professionals is that they need to understand their own experience with generosity and their client’s perspective. Generosity is a voluntary act of kindness without an expectation of return. With the law students I teach, I ask them to think about the ways they have personally experienced generosity. Advisors should ask the same of themselves before they have intentional philanthropy conversations with their clients. Then the advisor can facilitate their clients’ ability to give the right gift at the right time with the right asset to the right charity. As advisors, we have the privilege to be the voice of strategic generosity with our clients – culture carriers of generosity, so to speak. Let’s lean into it.