Financial advisers who broach the topic of philanthropy with clients don't have to know how to reforest denuded land in Moldova or how to structure a scientific advisory board
Financial advisers who broach the topic of philanthropy with clients don't have to know how to reforest denuded land in Moldova or how to structure a scientific advisory board. But they may want to know someone who can.
Many advisers turn to philanthropic advisory firms, which provide advanced expertise in gifting, due diligence, foundation support and other areas of philanthropy, according to advisers who have made use of the experts' knowledge.
The firms that provide the advanced information, and some nonprofit groups that offer philanthropic advising and support to foundations, don't manage assets. Instead, they serve the advisers' clients, charging fees for their services, and keep the adviser as much in the loop as the client wants.
Increasingly, wealthy clients are viewing philanthropy as an investment, and philanthropic advisers can help clients determine how much to give, a time horizon for seeing results, how to diversify giving within a target area and even how much risk to take, said Renee Duba, a senior financial adviser with William Blair & Co. LLC.
She refers clients to Rockefeller Philanthropy Advisors.
“I can't imagine any investment manager or financial adviser having the skill set that Rockefeller does,” Ms. Duba said.
Clients who need help focusing their “mission” or getting the next generation involved in the family's philanthropy should have access to philanthropic advisers, said Cassidy Burns., a financial adviser with Riverbridge Partners LLC.
She also refers clients to specialized philanthropy advisers for grant-making assistance in a certain area, such as early-childhood education or world poverty.
TEAM APPROACH
“I definitely see a fit for bringing in philanthropic advisers; working as a team is a good thing,” Ms. Burns said.
David Dechman, chief executive of Summit Rock Advisors LLC, said he referred one client, who gives away about $40 million a year, to The Bridgespan Group.
The client has a staff of 30 people focused on charity programs but needed help thinking about overall strategies, goals and the effectiveness of the entire program, he said.
“Bridgespan brings the same quality of thinking and depth of resources that you would find in the corporate world — using a management consulting firm for a strategic business engagement,” Mr. Dechman said.
Some banks and brokerages are increasingly using outside philanthropic advisers because staff reductions made over the past few years eliminated people who performed such roles, said H. King McGlaughon, incoming president of Foundation Source Philanthropic Services Inc., which manages the administrative burdens for foundations and offers other philanthropic advising.
Other investment firms and banks always have pulled in philanthropy specialists.
TCC Group, for instance, helped a client of JPMorgan Chase & Co.'s wealth management department set up and evaluate a $100 million initiative. From 2002 through 2008, that effort provided grants to 84 colleges and universities to develop programs and raise the profile of Asian studies programs.
The firm monitored the project over five years so midcourse corrections could be made to improve the effectiveness of the programs as they were operating, said Richard Mittenthal, TCC Group's chief executive.
Philanthropic advisory firms offer a range of services, such as creating a strategic-giving plan and mission, identifying worthy charities for specific causes, developing family philanthropy, research and analysis of major gifts and even creating a scientific advisory board.
“If someone has a solution-oriented mission, we help them think through their goals and identify charities,” said Rockefeller Philanthropy Advisors chief executive Melissa Berman.
Most philanthropic advisory firms can act as in-house philanthropy specialists for others. Arabella Philanthropic Investment Advisors, for instance, provides such services for a wealth advisory firm on the West Coast and a law firm in Boston.
“Advisers call us when they hear from clients with either a specific aspiration around philanthropy or a frustration around philanthropy,” said Wayne Farmer, Arabella's managing director.
NARROWING CHOICES
The Bridgespan Group works with advisers to help them increase their knowledge of charitable giving, including ways to identify successful philanthropic initiatives and teaching them what to consider when narrowing down charities to support.
“We help them engage clients successfully about philanthropy and show them how such discussions can deepen the personal relationship with the client,” said Susan Ditkoff, a Bridgespan partner.
The Philanthropic Initiative teaches advisers how to engage clients and raise questions about charitable giving.
“A lot of advisers just don't feel they can go there; giving may be too personal and they are afraid of risking the relationship with the client,” said Jim Coutre, a vice president with the nonprofit. “Every year, more and more financial professionals embrace philanthropy, and they understand it's a way to strengthen and expand their relationship with the client, and differentiate them from the pack.”
Of course, not all advisers are interested in looking for outside help. Some think they should develop philanthropy strategies as part of financial planning services.
Johnne Syverson and David Strege, certified financial planners with Syverson Strege & Co., spent “a lot of time, energy and money” becoming philanthropy specialists and made it part of their business plan, Mr. Strege said.
Now they market themselves as giving experts as well as planners.
Bringing in an outside firm can introduce problems, Mr. Strege said.
By providing the philanthropic advice to clients directly, they ensure that plans are implemented correctly.
“We can make sure giving is coordinated with the rest of the client's finances,” Mr. Strege said.
Email Liz Skinner at lskinner@investmentnews.com
