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2002 Study of the financial adviser’s role in philanthropy

Working Paper No. CPNS25

Dr Kym Madden

Centre of Philanthropy and Nonprofit Studies Queensland University of Technology

Brisbane, Australia

April 2004

The Centre of Philanthropy and Nonprofit Studies is a research unit at the Queensland University of Technology. It seeks to promote research from many disciplines into the nonprofit sector.

The Centre of Philanthropy and Nonprofit Studies reproduces and distributes these working papers from

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© Queensland University of Technology 2004

Published by the Centre of Philanthropy and Nonprofit Studies The Queensland University of Technology

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ISBN 1 74107 060 0

ISSN 1447-1213

1

Abstract

This paper presents the key findings from a study of Australian financial advisers’

attitudes to philanthropic planning with high net worth clients, and the extent to which

they engage in it. This is the first study of its kind in Australia and is based on a

United States (U.S.) study by The Philanthropic Initiative (TPI) in 2001.

The TPI study showed U.S. financial advisers were reluctant to ask clients about

charitable giving, an attitude that is also reflected in the United Kingdom (The Giving

Campaign, 2001, 2003, 2004). Despite this, U.S. advisers are increasingly interested

in doing so, compared to earlier studies, and desire greater knowledge and skills in

this area. While financial advisers in the United Kingdom (U.K.) are more cautious,

they too desire better information and training about planned giving.

The growing willingness by U.S. advisers and, to a lesser extent, U.K. advisers to

become more competent in charitable planning reflects new opportunities arising

from the huge intergenerational wealth expected to be transferred in the next few

decades, a trend that is also affecting Australia.

This study’s findings suggest that Australian financial advisers, like U.K. advisers, are

not as active in asking their high net worth clients about philanthropy as their U.S.

counterparts. Further, they perceived the use of charitable vehicles by clients as

lower. On a positive note, given the growing opportunities for financial advisers to

incorporate strategic philanthropy in their services, the majority of Australian advisers

surveyed believed that clients could find satisfaction through philanthropic giving.

They welcomed resources and support that would assist in guiding clients interested

in tax effective giving. The materials identified as most likely to be helpful to them

were identified as educational materials they could share with clients, a single

Centre of Philanthropy and Nonprofit Studies 1 Working Paper No. CPNS25

2

volume of philanthropic options, case histories and, to a lesser extent, sample

documents for private foundations and relevant ‘how to’ articles in professional

journals.

An initial interpretation of the findings suggests that Australian financial planners

have a low level of interest in planned giving. A closer inspection of the mix of results

suggests a more complex story, with signs of emerging interest. For example, in

response to a specific question, many advisers showed interest in joining a

professional network that promoted philanthropic giving and resources on the

condition that it was both confidential and non-commercial in nature. Thus this

study’s results suggest latent, but not active, interest in philanthropic planning by

Australian financial planners advising high net worth clients.

1.0 Introduction

Despite recent uncertainties, the expected transfer of wealth by the current older

generation across developed countries, including Australia, is widely acknowledged

as the largest in history (AMP, 2003; Havens and Schervish, 2003; TPI, 2000). It is a

trend based on significant increases in housing wealth, superannuation, savings, and

investments (AMP, 2003) with expected benefit to females as well as males, as

reported by Steinberg and Cain (2003). In the U.S, the most commonly cited figure is

that at least $US41 trillion dollars (in 1998 dollars) will be transferred by 2052

(Havens & Schervish, 2003). In Australia, there are no clear figures but simulations

by leading financial services company AMP confirm a substantial positive impact

over the next 30 years. Additional factors such as smaller family size, increased life

expectancy, and substantial wealth that has already been accumulated through

changes to the value of property and shares mean that retirees are increasingly

wealthy, even before inheritances, a trend that is also occurring in other countries


3

such as the U.K., Italy and Sweden (AMP, 2003). The wealth held by older

Australians was approximately 22 per cent of total household wealth in 2003 and will

increase to 47 per cent by 2030 (AMP, 2003; Kelly, 2002).

As a result, high net worth individuals are increasingly well placed to consider

opportunities for charitable giving. Boston College’s Social Welfare Research

Institute’s study of intergenerational transfers suggests that up to $US25 trillion will

be given in the U.S. to nonprofits over the coming decades, mostly through

planned gifts. Further, the study shows that, in the U.S. at least, more than four out

of five high net worth households say they wish to do more financially for the

nonprofit community (Prince, 2000). In the U.K. a study by the Giving Campaign

showed a widespread desire by donors, including the wealthy, to contribute to the

improvement of people’s lives through financial gifts (2004).

In Australia, today, it is the high net worth donor who gives the most on average to

the nonprofit sector. The latest figures from the Australian Taxation Office suggest

that donating taxpayers earning between $500,000 and $1 million annually claim

an average of $6,515 in tax-deductible donations. Once they earn over $1 million,

however, this figure jumps almost 10 times with the average donating taxpayer in

Australia claiming $64,638 in charitable gifts (CPNS, 2004). While Australia differs

from the U.S. in many respects, it is likely that the nonprofit sector in Australia will

also benefit from the accelerated transfer of wealth to individuals, if not to the same

degree.

At the same time as this growing capacity for philanthropic activities by individuals

come new tax-effective charitable vehicles and new charity financial products in

Australia and elsewhere. In the U.K., for example, improved tax breaks for

charitable giving has meant a huge boon to the nonprofit and financial services


4

sector (The Giving Campaign, 2003). In Australia, the introduction of Prescribed

Private Funds (PPFs) as a new type of donation deductible vehicle has been linked

to a substantial increase in donations from the higher income earner in just one

year (CPNS, 2004).

Overall, there are new opportunities for individuals to think more strategically about

what their charitable dollar can achieve, as well as how they can give in tax-

efficient ways (The Giving Campaign, 2001). Moreover, the few studies in this area

of advising high net worth individuals about charitable giving suggest a need by

such individuals for quality assistance in this area. One recent study in the U.S.

suggests that affluent individuals who want to make gifts to charities did not always

know how best to do so (Weems, 2002). Moreover, while many U.S. affluent

individuals wanted to engage in philanthropic giving, they also did not want to

jeopardise their own financial situation and lifestyle (Prince, 2000). As the income

and wealth of affluent individuals continues to grow, more ‘will see themselves

capable…of doing something more systematic and formative for the people and

causes they care about’ (Havens et al, 2003 p.38). Nevertheless, the complexity of

the financial environment regarding assets and options for tax treatment is likely to

increase demand for ‘the most financially congenial contribution strategy’ (p.23).

Leading Californian donors suggested that there was an unsatisfied need for

information about all charitable options, clear explanations of these options, and

advice that suited their circumstances (Stone and McElwee, 2004). While these

donors wanted an appropriate approach by advisers, for example, they did not

wish for their financial advisers to be ‘pushy’, they perceived that their advisers

could do more to assist them with their philanthropic needs (TPI, 2000; Stone &

McElwee, 2004). Thus there appears to be potential for advisers to provide more


5

comprehensive and strategic services in philanthropic planning, which has served

to widen the gap between actual and ideal practice in the U.S.

In a similar vein, affluent individuals in the U.K. wanted to ‘do good’ and ‘make a

difference’ through philanthropic giving (The Giving Campaign, 2004, p.3). Two of

the key reasons they held back was a fear that they may not be able to afford it,

and they had little guidance about an appropriate level of giving. A study of charity

financial products by The Giving Campaign suggests that the need for financial

advice was largely unfulfilled, although many clients respond well to it (2003).

This apparent lack of informed assistance from financial advisers or other sources

supports earlier studies that show U.S. financial advisers have been extremely

reluctant to discuss a client’s philanthropic giving unless specific advice was sought

by clients (TPI 2000). In the U.K., too, financial advisers traditionally have avoided

discussing giving to charity with their clients at all (The Giving Campaign, 2001).

Almost 60 per cent of independent financial advisers (IFAs) and nearly half the

stockbrokers surveyed never or hardly ever gave such advice. Moreover, over 80 per

cent of stockbrokers in the U.K. said it was the client, not themselves, who raised the

issue of giving money to charity. When they did give advice, they showed great

caution and largely recommended the same one or two giving methods, regardless of

client needs. It appears that U.K. advisers had limited knowledge of charitable

vehicles, for example, stockbrokers and investment managers were more aware than

others of benefits of donating shares. Overall, The Giving Campaign’s study showed

a generally under-developed culture of giving advice about tax-efficient or planned

giving to charity in the U.K. (2001).

These U.S. and U.K. studies show financial advisers’ resistance to discussing a

client’s needs in this area has been based around three difficulties: concern about


6

the ethics of their raising philanthropic questions with clients (being unsure that it

would be appropriate for them to do so); concern about how to handle such

discussions sensitively (not wanting to risk embarrassing or offending their clients);

and concern that they lacked information and resources to provide adequate advice

about approaches to charitable giving.

However, an extensive study in 2000 by The Philanthropic Initiative (TPI), Inc. of

Boston suggests change may be occurring, at least for U.S. financial and legal

advisers: advisers are expressing an unprecedented level of interest in

philanthropic planning with their high net worth clients, with some indications that

they are becoming more active in this area (TPI 2000). This emerging interest by

advisers in philanthropy may be explained by the growing realization that transfer

of wealth broadens the activities to which clients may wish to apply their money.

Two key obstacles for financial advisers wishing to be more proactive in assisting

clients with philanthropic planning were a lack of planning tools and a lack of

resources and information (TPI, 2000). U.S. advisers generally wanted more and

better materials and templates to make their discussions more effective and to help

them counsel interested clients about their philanthropic options. Overall, this

comprehensive survey showed substantial gaps between what financial advisers

wanted and what existed regarding philanthropic planning.

Findings across both the U.S. and the U.K. suggest that financial advisers have an

opportunity to better assist affluent individuals to plan and manage their charitable

giving (TPI 2000; The Giving Campaign 2001). In so doing, benefits are likely to

accrue to both donating individuals and their financial advisers, as well as to

individual charities and the wider community.


7

Individuals will benefit if their charitable giving is satisfactory to them. Part of this

satisfaction is obtaining sound advice, finding the right resources and using

contacts to facilitate decision-making (Stone and McElwee, 2004). Even better if

donors can achieve both positive philanthropic outcomes and look after their

financial affairs (The Giving Campaign, 2003). By intelligently integrating

philanthropy into their estate planning, says Karoff (1994), individuals can satisfy

the need to ‘feel good about themselves’ as well as being an effective way of

passing on family values to the next generation and beyond (p.47).

For the financial planner and advisory firms, philanthropic planning skills will

contribute to and help develop client relationships, based around meeting a client’s

overall needs and desires. According to Weems (2002, p. 56), this is a ‘golden

opportunity’ for advisers as it draws upon their ability to provide objective financial

advice and, based on their existing advisory relationships with their clients, allows

them to extend their services to clients.

The potential for cross-over between the charitable and financial services sectors is

great. In the U.S., total charitable giving was over $US240 billion in 2002 but many

individuals who give do not take advantage of financial advice and strategies that

would enable them to ‘give smarter’ (Olson, 2003, p.12). For example, an analysis of

affluent tax filers in the U.S. showed an average of $3000 in capital gains tax savings

could have been achieved if appreciated assets instead of cash had been donated

(The New Tithing Group, 2003, p.4). In the U.K., total charitable giving from

individuals of all incomes was estimated at ₤7.3 billion in 2003, approximately one

twelfth of the ₤80 billion plus that flowed into life and investment financial services,

excluding insurance products and retail banking (The Giving Campaign, 2003). Yet

the linkage between these sectors was relatively low: research points to tax effective


8

charity vehicles being underutilised by donors and such vehicles are not well

publicised within the financial services sector (p.2).

Philanthropic planning competence brings the potential for advisers to develop client

relationships, with future rewards attached to increased loyalty, increased funds

under management and referrals (Prince, 1998). An advisory firm could develop its

reputation by encompassing giving strategies and attract clients by its capacities

(The Institute for Philanthropy, 2003). Further, advisers are likely benefit from ‘a

sense of personal satisfaction by doing well for their clients and charity’, a benefit that

should not be discounted (Prince, 2000, p. 24). In the U.K., three quarters of

independent financial advisers and stockbrokers said a strong incentive for them to

offer advice on tax efficient or planned giving was the opportunity to do a good job for

their clients; to deliver quality advice (The Giving Campaign, 2001). Indeed, advisors

have the opportunity to inform clients about options for higher levels of giving and

advise on investment strategies and protection for a client’s circumstances (The

Institute for Philanthropy, 2003).

Importantly, the contribution that planned giving makes to the common good is

great, and expanding the use of planned giving vehicles expands this community

benefit (TPI, 2000). These three key opportunities – for financial advisers, clients

themselves and the broader community – underpin the interest by the Centre of

Philanthropy and Nonprofit Studies (CPNS) in undertaking this research.

2.0 The purpose of this study

This study was undertaken because there was little known about Australian

financial adviser attitudes to philanthropic planning. Using TPI’s survey of U.S.

financial advisers in 2000 as a basis, this study sought to investigate the financial


9

adviser’s role in philanthropy, as Australian advisers saw it, and to compare

findings.

In particular, this study’s purpose was to:

1. Identify Australian financial advisers’ attitudes to philanthropic planning;

2. Determine the extent to which they engaged in philanthropic planning;

3. Identify advisers’ perceptions of client attitudes towards philanthropy;

4. Identify resources that informed advisers, in reality and that were ideally

wanted, about philanthropic planning.

This study was planned as introductory research that would provide a platform for

a more extensive investigation of the attitudes and behaviours of professional

advisers in Australia. The rationale for using the TPI survey, with slight

modifications to suit the local context for the study, was that this research was

arguably the most up-to-date comprehensive research with professional advisers

available, reaching some 500 financial advisers, accountants, insurance

professionals and lawyers. Further, its conclusions were drawn from the advisers’

survey itself plus in-depth interviews with a further 89 advisers, donor surveys,

focus groups and workshops (TPI, 2000). Thus, by using the survey template

provided by TPI, this study’s findings can be compared against the robust U.S.

research.

3.0 Method

The study comprised a mail self-completion survey of 66 financial advisers and

estate lawyers who counselled high net worth clients, located in Melbourne, Sydney

and/or Brisbane, the three largest cities in Australia. High net worth was defined for

this study as having assets of over $2 million or earning over $500,000 annually,


10

using the Australian Security & Investment Commission’s (ASIC’s) definition of ‘gold

card investor’ (www.asic.gov.au). The study was undertaken in September and

October, 2002.

There are no definitive numbers of professionals in Australia who offer advice to

individual clients on financial matters: they span the fields of accounting, law and

financial planning. The number of financial planners is estimated between 15,000 to

18,000 (http://www.moneymanagement.com.au/articles/17/0c01af17) but possibly

fewer than 1,000 across Australia may be primarily involved in advising high net

worth clients. This estimate is based on Australia’s relatively small population and, in

turn, its limited number of high net worth individuals. For example, in 1999-2000

there were some 7,750 individuals with an annual taxable income of over $500,000 a

year (Australian Taxation Office, 2003).

The survey’s questions largely replicated a telephone survey of U.S. financial

planning and insurance advisers, lawyers and accountants in 2001 (TPI, 2001), with

some minor modifications to suit the Australian context and the resources available.

A total of 74 questions were asked, including demographic and optional ones. See

Appendix 1 for a copy of the survey. Most of the questions were closed-ended

quantitative, but several allowed for elaboration or alternative answers. Questions

were grouped into five key sections:

A. Adviser and client behaviour regarding philanthropy

B. Motivations for or against discussing philanthropic giving

C. When advisers discussed philanthropic giving

D. Client motivations for and against philanthropic giving

E. Actual and ideal resources for philanthropic planning.


http://www.moneymanagement.com.au/articles/17/0c01af17

11

In all, close to 300 surveys were distributed to potential respondents through the co-

operation of several large financial service firms that gave CPNS access to their staff

lists. Additional surveys were distributed with the co-operation of a professional

association for estate lawyers. The survey itself was accompanied by an invitation to

participate, an explanation of the purpose of the study and instructions for

completion. Up to two follow-up messages were sent to potential participants to

encourage returns.

A response rate of approximately 30 per cent was achieved, which is a good

response for self-completion surveys and a high response for such a lengthy one.

This suggests the internal method of distribution worked well and/or that participants

found the topic of interest. This is especially so as not all recipients of the survey

were pre-qualified by CPNS. Also, it was difficult to precisely determine the number

of surveys distributed, as one firm co-operated on the basis of their use of email for

dissemination.

In brief, data was collected over a two month period in late 2002 with the support of a

small number of leading financial and legal organisations that raised advisers’

awareness of the study and helped to disseminate the survey to qualified

participants. Analysis of the findings took a further two months and findings were

informally communicated to key stakeholder groups up to the preparation of this

Working Paper.

4.0 Results

Who completed the survey?

The advisers in this study comprised Australian financial planners, accountants and

estate lawyers based in Melbourne, Sydney or Brisbane who advised high net worth


12

individual clients about financial matters. Respondents were predominantly male (58

male, 8 female respondents) and they largely worked in firms employing over 20

professionals. Indeed, more than one third of respondents worked in large firms (with

more than 100 professionals).

The largest age group was under 50 years old, as Figure 1 shows:

• Almost 40 per cent of respondents are aged under 40 years old;

• Almost 35 per cent are 41-50 years;

• Just over 20 per cent are 51-60 years.

4.8%

20.6%

34.9%

39.7%

61-70

51-60

41-50

Under 40

FIGURE 1. Age of advisers in survey. N=63.

Finally, respondents generally did not engage in substantial philanthropic giving

themselves (65 per cent of advisers saying they did not, 35 per cent saying they did).


13

Key findings to the study’s concerns are presented next. The survey instrument is

provided in Appendix 1 and all additional details are held in CPNS’s working

database files, which are available if this information is of interest.

How many high net worth clients do advisers counsel?

Three quarters of advisers in this study counselled more than 10 individuals with a

high net worth in the past year, and half had over 20 high net worth clients (75 per

cent and 50 per cent, respectively). For these clients, half the advisers were from 70

to 100 per cent the principal financial advisor. For some 19 per cent of advisers,

however, they were not the principal adviser for any of these clients. Overall, the

extent to which the adviser was the client’s principal adviser varied greatly.

Is it the policy of advisers to discuss charitable giving with their clients?

Advisers generally did not discuss charitable giving as a matter of policy with their

clients: some 75 per cent of advisers said it was not their policy to ask clients about

any interest in charitable giving or philanthropy. Some 75 per cent of advisers had

discussed philanthropy with over 10 per cent of their clients but almost 19 per cent

had not discussed it with clients at all. See Figure 2.


14

0

2

4

6

8

1012

14

1618

0 10 20 30 40 50 60 70 80 90 100

Percentage of clients

Num

ber o

f adv

iser

s

FIGURE 2. Percentage of high net clients with whom advisers have

discussed philanthropy. N=64. Do advisers help clients develop strategies for charitable giving?

The great majority of financial advisers do not develop strategies for helping clients

develop a focus for charitable giving, as Figure 3 shows.

85.9%

14.1%

No

Yes

FIGURE 3. Whether advisers develop strategies for helping

clients develop a focus for charitable giving. N=64.


15

Do advisers refer clients to other parties for assistance with philanthropy?

Just under half of all advisers referred clients to others for assistance with their

charitable giving, as Figure 4 shows. That is, the majority of advisers do not link

clients to others who might be of assistance to them.

Those who did refer clients to third parties for direct assistance with philanthropy

relied upon a range of third parties, as Figure 5 shows. Of these, the two most

commonly used third parties were:

• Charitable foundations (relied upon by 19.7 per cent of advisers who referred

clients); and

• Lawyers (relied upon by 18.5% of advisers who referred clients).

53.1%

46.9%

No

Yes

FIGURE 4. Whether advisers refer clients to other parties who

can help them with charitable giving. N=64.


16

12.1%

16.7%

7.6%

13.6%19.7%

12.1%

18.2%

Other

Organisations

Giving advisers

AccountantsFoundations

Specif ic charity

Law yers

FIGURE 5. Third parties to whom clients were referred by

advisers for advice on philanthropic matters. N=34. Note: ‘Giving advisers’ refers to ‘planned giving professionals’. Also ‘organisations’ refers to ‘charitable organisations’ (covering several charities or causes), and ‘foundations’ refers to ‘charitable/community foundations’.

How often are charitable vehicles used by clients?

Charitable vehicles were not used widely by clients for philanthropic activities.

Advisers report that only a small percentage of clients used a charitable vehicle such

as a private foundation or charitable trust governed by trustees, a community

foundation or donor-advised funds at a professional trust company. For example, 75

per cent of advisers report that up to 10 per cent of their clients used private

foundations or charitable trusts and 25 per cent report that up to 10 per cent of their

clients used a community foundation.


17

A substantial number of advisers report no clients using either of these vehicles (48

per cent and 61 per cent of advisers, respectively).

Overall, the most popular method of giving was through a private foundation or

charitable trust governed by the trustee, followed by community foundations and

donor-advised funds at a trust company (see Figure 6). However, only a small

number of advisers were involved in such vehicles, and these clients made up a very

small percent of their client pool.

Incidentally, adviser responses were low for these questions (42 out of 66), possibly

due to a perception of irrelevance to them and so actual percentages of those using

these vehicles may be smaller.

02468

101214161820

0 10 20 30 40 50 60 70 80 90 100

Percentage of clients

Num

ber o

f adv

iser

s

FIGURE 6. Percentage of high net worth clients who intend to have

charitable trusts or private foundations created at their deaths, or make substantial charitable bequests. N=50.

Clients did sometimes use alternative mechanisms for substantial charitable giving

but usage reported by advisers was low. For 75 per cent of advisers, fewer than 50


18

per cent of their clients used other methods and for a further 17 per cent of advisers,

none of their clients used other methods for giving.

This same pattern showed in the legacies area. Just over 60 per cent of advisers had

clients intending to have charitable trusts or alternatives created at their deaths, but

these clients represented a very small percent of the adviser’s total client group. The

rest did not intend to give in that manner.

Why do advisers engage in philanthropic discussions with clients?

Advisers were concerned mostly with clients’ needs. Of different reasons suggested

to advisers for raising the subject of philanthropic giving with clients, the most

important was that giving can provide personal or family satisfaction (nominated by

almost 75 per cent of all advisers), followed by its potential to reduce taxes if planned

wisely (55 per cent). Advisers who did not agree, took a neutral position rather than

disagree.

Two other reasons – that it’s important for people to make a difference if they can,

and that charities can use the money more wisely than the government – were seen

in a more neutral light by advisers, with some differences of opinion, and so may be

seen as less important, from the advisers’ perspective.

Why don’t advisers engage in philanthropic discussions with clients?

When asked about eight potential reasons for not raising the topic of charitable giving

with clients, advisers varied widely in their responses. For example, advisers’

responses differed dramatically for whether they thought this was due to a lack of

knowledge about the tools of charitable giving, as Figure 7 shows.


19

The most support for any reason not to discuss philanthropy with clients, at almost 33

per cent of advisers, was that the client had not expressed charitable interests in the

past. To a great extent, advisers disagreed on why they did not raise philanthropy in

their discussions with their clients.

Indeed, there appeared to be stronger agreement on what was not important than on

what was important for choosing not to discuss philanthropy. For example, reasons

such as ‘I lack familiarity with a client’s personal life or values’, ‘It’s not my job to raise

the topic’, ‘I don’t feel comfortable talking about the topic’ and ‘I don’t have personal

experience/history with charitable giving’ were each rated as not important.

1=not important 5=very important

4.03.02.01.0

Freq

uenc

y

20

10

0

Std. Dev = 1.15 Mean = 2.5

N = 64.00

FIGURE 7. Perceived importance of a lack of personal knowledge

of the tools of charitable giving in not raising philanthropy with clients. N=64.


20

Overall, responses for this question were very mixed and further research is needed

to identify whether different types of advisers respond similarly.

When do advisers discuss philanthropic giving with clients?

It should be kept in mind that most advisers did not discuss philanthropy with clients.

Nevertheless, in response to a series of statements, advisers were more likely to

discuss philanthropic giving with clients when they had detailed knowledge of their

client’s financial picture (almost 90 per cent strongly or somewhat agreeing). Half

suggest they often raise the topic when the client is regularly volunteering time to

community activities. Importantly, however, they report discussing it only when the

client has expressed an interest in it first (68 per cent of advisers either strongly or

somewhat agreeing), as Figure 8 shows.

There was only a small level of support for the level of assets being a trigger for

discussion. Almost 68 per cent of advisers disagreed with the statement ‘I often raise

the subject of philanthropy when there are more assets than needed’ and of these

advisers, most strongly disagreed (40 per cent of all responses). When asked if there

was a particular asset level at which they would encourage clients to consider

charitable giving, over half said no. Of the 30 per cent who said there was an asset

level where clients might engage in substantial giving, the most likely level was

between $2 million and $5 million.


21

1.5%

7.6%

22.7%

33.3%

34.8%

Don't know

Strongly disagree

Somew hat disagree

Somew hat agree

Strongly agree

FIGURE 8 Advisers’ level of agreement with the statement ‘I only

discuss charitable giving when the client expresses an interest in it first’. N=66.

Why do clients engage in philanthropic giving?

There were two most compelling reasons for high net worth clients to engage in

philanthropic giving, from the advisers’ perspective: they desired to improve their

community or they cared greatly about a cause, issue or institution. Nearly 90 per

cent agreed improving the community was either a very or somewhat important

motivator, as Figure 9 shows, while 86 per cent of advisers felt caring about a

cause/organisation was a strong motivator, as Figure 10 shows.


22

3.1%

3.1%

4.6%

43.1%

46.2%

Not sure

Not important at all

Not very important

Somew hat important

Very important

FIGURE 9. Advisers’ perception of the importance of improving

the community in a client’s decision to engage in philanthropy. N=65.

Also perceived to be important in prompting giving were the tax benefits in the gift,

and religious or spiritual motivations (63 per cent and 57 per cent respectively).

There was some disagreement about the importance of enhancing one’s personal or

family name in the community, having a tradition of family giving and creating a

family legacy: none of these were seen as critical for high net worth clients generally.

Of potential reasons to give, the least important was being asked to do so by a

business or social acquaintance and not being able to say no.


23

4.6%

1.5%

7.7%

41.5%

44.6%

Not sure


Not very important

Somew hat important

Very important

FIGURE 10. Advisers’ perception of the importance of caring about

a cause, issue or institution in a client’s decision to engage in philanthropy. N=65.

Why don’t clients engage in philanthropic giving?

As to why high net worth individuals do not engage in charitable giving, advisers felt

there were lots of reasons. Indeed, seven out of nine potential reasons offered them

were perceived as important obstacles. The top three, however, all related to fear of

not having enough money to do so. The most overwhelming reason of these was

their concern to have enough to pass on to their children (with over 75 per cent of all

advisers agreeing with this statement and 27 per cent strongly agreeing), as Figure

11 shows. The two other leading reasons for clients not to engage in philanthropy

were perceived as clients thinking their wealth much smaller than it actually was

(over 70 per cent agreeing) or clients thought they would need their assets

themselves (68 per cent agreeing).


24

Also perceived to be important as an obstacle was a concern by clients that their gifts

would not be used wisely (64 per cent agreeing, respectively).

11.3%

8.1%

4.8%

48.4%

27.4%

Not sure


Not very important

Somew hat important

Very important

FIGURE 11. Adviser rated importance of thinking there will not be

enough money left for the children to the clients’ decision not to engage in philanthropy. N=62.

How important are different types of resources for advisers?

Advisers nominated seminars and training as the most helpful resources for them in

philanthropic planning, currently. Almost 70 per cent agreed that these are at least

somewhat important. Two other types of resources were also valued by a majority of

advisers: advice by colleagues and storytelling by other donors (64 per cent and 56

per cent of all advisers, respectively, saying these are at least somewhat important).

While these latter two attracted less overall support, all three were keenly embraced

by some 20 per cent of advisers This is relevant as, as noted, most advisers were not

active in advising clients on philanthropic giving. Figure 12 shows advisers’


25

perceptions of the helpfulness of different types of philanthropic resources (capturing

extreme positions only).

05

10152025303540

Sem

inar

s an

dtra

inin

g

Prof

essi

onal

jour

nals

Sto

ries

byot

her d

onor

s

Softw

are

Advi

ce fr

ompr

ofes

sion

als

Adv

ice

from

colle

gues

Num

ber o

f adv

iser

s

very important

not important at all

FIGURE 12. Advisers’ perception of resources as very important or

completely unimportant for them (contrasts extreme positions).

Even resources seen as helpful by many advisers were perceived by some as not

helpful at all, which indicates that further research may show different types of needs

by advisers. For example, advisers were strongly divided about advice from planned

giving professionals: some 50 per cent found them at least somewhat important but

27 per cent completely disagreed, as Figure 13 shows. That is, this source of

information was not at all important to over a quarter of them.

Overall, retirement/charitable giving software was the least helpful resource for them

and, to a lesser extent, articles in professional journals (with 81 per cent and 66 per

cent, respectively, describing them as not very important or not important at all).


26

7.8%

26.6%

14.1%

35.9%

15.6%

Not sure


Not very important

Somew hat important

Very important

FIGURE 13. Advisers’ perceptions of the importance of advice

from planned giving professionals in their advising clients about philanthropy. N=64.

It should be noted that all these responses related to resources as they were

currently offered or presented or, more accurately, as they were perceived by

advisers in their current form. This is an important distinction to make as advisers

were also asked about how useful such resources could or would ideally work for

them (reported next). For example, on one hand advisers generally did not find

articles in professional journals useful for them and, on the other, they said they

would like to get information from professional journals. The previous responses,

then, refer to resources in their current form ‘warts and all’ while the following

responses refer to the value of these resources if perceived shortcomings or

obstacles were addressed. This kind of finding warrants further investigation and

elaboration to gain insight into advisers’ perceived needs. In brief, there appears to

be potential for some resources to be more helpful for advisers.


27

In terms of the resources that advisers would ideally like to be able to use for

philanthropic planning, a variety of materials sparked interest. Figure 14 shows a

comparison of ten different types of resources in terms of their appeal for financial

advisers thinking about philanthropic planning.

0

10

20

30

40

50

60

"How

to"

artic

les

Sin

gle

volu

me

Sam

ple

fund

agre

emen

ts

Sam

ple

docu

men

ts

Edu

catio

nal

mat

eria

ls

Cas

ehi

stor

ies

Web

site

Tele

phon

ehe

lp li

ne

Em

ail

lists

erve

Tele

phon

em

ento

ring

Num

ber o

f adv

iser

s

FIGURE 14. Advisers’ perceptions of resources as helpful for philanthropic

planning, as they are or could be (combines adviser perceptions of somewhat helpful and very helpful resources).

Four types of materials topped the list of resources with the widest appeal for

advisers regarding philanthropic planning:

1. educational materials about philanthropy to share with clients (84 per cent of

advisers seeing these as at least somewhat helpful);

2. sample documents for private foundations (83 per cent);

3. a single volume providing an overview of philanthropic options (81 per cent);

4. case histories (80 per cent), and ‘how to’ articles in professional journals (75

per cent).


28

Three of these inspired the most intense interest of all options:

1. educational materials about philanthropy they could share with clients (47 per

cent of all advisers saying this would be very helpful to them);

2. a single volume of philanthropic options (44 per cent saying this would be

very helpful to them); and

3. case histories (44 per cent saying this would be very helpful to them).

Moreover, other types of resources about philanthropic planning were not dismissed.

The majority of advisers also thought the two additional resources would assist them:

sample fund agreements with community foundations (66 per cent of all advisers

agreeing that this would be at least somewhat helpful), and an interactive website

would be helpful (52 per cent agreeing).

As well, most of the study’s participants (67.7 per cent) responded positively when

asked about their interest in participating in a network of professional advisers that

promoted charitable giving and identified resources useful to advisers, as Figure 15

shows. Such a network was presented as being run on a non-commercial, strictly

confidential, limited membership basis.

In contrast, advisers shied away from mentoring by telephone (77 per cent saying

this would be not very helpful or not helpful at all), a telephone help line for advisers

at a local community foundation (63 per cent) and an email Listserve devoted to

developments in charitable giving (56 per cent). These were not seen as particularly

helpful resources.

Further, additional analysis comprising cross-tabulations for demography, adviser

behaviour and adviser attitudes/perceptions was conducted but no clear patterns


29

emerged. At times, the numbers involved were too low to draw sound conclusions. At

other times, results were mixed, with weak associations for variables investigated.

More comprehensive research is indicated, as noted in the Conclusion.

32.3%

67.7%

No

Yes

FIGURE 15. Whether advisers would join a network formed to

promote the growth of charitable giving and philanthropy and to identify resources that would be useful to advisers. N=65.

5.0 How Australian advisers compare to U.S. advisers

This section compares the results of this study with the most recent U.S. study (TPI,

2000). However, there are a number of environmental factors that should be borne in

mind when engaging in comparisons between the U.S. and Australia.

Importantly, there are significant differences in the revenue structure for the nonprofit

sector, as indicated by The Johns Hopkins Comparative Nonprofit Sector Project

(see Table 1). The U.S. has a greater culture of philanthropic giving than Australia


30

and a wider range of tax incentives for such behaviour to a broader class of

organisations. It is widely recognised that the financial planning issue of death duties

or estate tax is a significant issue for U.S. citizens who can largely mitigate the tax

impact by making charitable donations (Burrill, 2001). In Australia, death duties were

repealed in the 1970s.

Table 1: Revenue Structure of the Nonprofit Sector in 1995 Expressed as Per Cent of Total Revenue

Country Public Sector Donations Private fees & charges

Australia 30 9 61 U.K. 47 9 45 U.S.A. 31 13 57

Average 36 10 54

Source: Compiled from figures provided by Johns Hopkins Comparative Nonprofit Sector Project (http://www.jhu.edu/~cnp/country.html accessed 27 April 2004)

Financial planning has been used frequently in the U.S. to allow the vast majority of

potential estate tax payers to avoid the tax by philanthropic donations. Before 2002,

one partner in a U.S. household could pass on death an unlimited amount of assets

to his or her spouse and $675,000 in property and other assets to heirs free from

taxation under the U.S. Federal estate tax laws. The estate tax rates of 55 per cent

on taxable estates of $3 million or more are among the highest in the developed

world. An additional surtax of 5 per cent is applied to estates above $10 million to

recapture the benefit of lower tax rates. In 2002, however, a new estate tax regime

was introduced over a ten year phase-in period. The Economic Growth and Tax

Relief Act of 2003 repeals the 5 per cent surtax and tax rates in excess of 50 per cent

effective for 2002. The tax will be reduced gradually until it disappears in 2010 but

the tax will be reinstated in 2011 unless new legislation is passed.


31

There has been significant debate about the effect of such a reduction in estate tax

on philanthropic gifts in the U.S., with only time telling what the outcome will be. For

further discussion, see Bass and Irons (2003), Burrill (2001) and Rooney and Tempel

(2001). For the foreseeable future, differences between the U.S. and Australian tax

environments are liable to affect philanthropic planning by financial advisers in these

countries.

The following comparison of data highlights the main similarities and differences

between Australian and U.S. financial advisers (where a similar survey was

conducted). Inconclusive data are not included.

• Profile of adviser. The profile of the U.S. financial adviser survey respondent

broadly matched that of the Australian respondent. In both studies the

majority of advisors tended to be the principal adviser for their high net worth

clients (i.e. they were the principal financial adviser in over half of their client

base). They differed in that Australian advisers counselled a greater number

of clients with a net worth of two million dollars or more or an annual income

in excess of $500,000. While 75 per cent of Australians counselled more than

10 high net clients, 75 percent of the U.S. advisers counselled 6 or more.

• Discussion of philanthropy with clients. While most Australian advisers

had discussed philanthropy to a small degree with these clients, it was not

their policy to ask about their client’s interest in charitable giving or

philanthropy. In contrast, the majority of U.S. advisers reported that they did

generally discuss philanthropy with their high net worth clients, and that it was

their practice to ask these clients about their interest in charitable giving

(although it should be noted that there appeared to be some contrasting data

around this topic at different stages of the TPI study).


32

• Client behaviour. On average, Australian advisers reported that few if any of

their clients intended to have charitable trusts or private foundations created

at their deaths, or to make substantial charitable bequests. Approximately 20

per cent of U.S. clients were reported as intending to have charitable trusts

established at their deaths.

• Motivations for discussing philanthropy, or not. Advisers in Australia and

the U.S. were similar in that both placed importance on the client finding

personal or family satisfaction in giving in choosing to discuss giving with

them. Further, advisers in both countries agreed that feeling uncomfortable

talking about the topic and not having personal experience/history with

charitable giving were not important in their choosing not to discuss

philanthropy with clients.

However, some differences emerged. In deciding to discuss philanthropy with

their clients, Australian advisers placed less importance than U.S. advisers on

the following two reasons - ‘by planning wisely, charitable giving can reduce

taxes’ and ‘charities can use money more wisely than the government will if it

goes to taxes’. Further, in choosing not to discuss philanthropy, Australian

advisers placed more importance than U.S. advisers on the reason that ‘the

client has not expressed charitable interests in the past’.

• When advisers are likely to discuss philanthropy with clients. Advisers

in Australia and the U.S. were similar in that they claimed to be more likely to

raise the subject of philanthropy when they had a detailed knowledge of their

client’s financial picture. In both countries, the majority of advisers said there


33

was not a particular asset level at which they would encourage clients to

consider charitable giving. Australian advisers who disagreed suggested that

this level was $2,000,001 to $5,000,000, which was similar to U.S. advisers.

They differed however about the importance of some triggers. Australian

advisers generally disagreed with the statement, ‘I often raise the subject of

philanthropy when there are more assets than needed’ while American

advisers strongly agreed with it. Australian advisers also generally agreed

with the statement, ‘I only raise the subject of philanthropy when the client

expresses an interest in it first’, in contrast to U.S. advisers who did not.

Finally, Australian advisers were strongly divided in whether they agreed with

‘I often raise the subject when a client is regularly volunteering his/her time in

the community’ whereas U.S. advisers generally agreed with it.

• Perceived client motivations for philanthropic giving. Advisers in

Australia and the U.S. were similar in that both agreed that four important

client reasons for engaging in philanthropy were ‘they want to improve their

community’, ‘they care greatly about a cause, issue, and institution’, ‘they

have spiritual or religious motivations’ and ‘they see tax benefits in the gift’.

Further, advisers in both the U.S. and Australia agreed that an unimportant

client reason for engaging in philanthropy was that ‘they are asked by a

business or social acquaintance to whom they cannot say no’.

They differed, however, in that Australian advisers disagreed that ‘a tradition

of family giving’ was important to clients in engaging in philanthropy, while

U.S. advisers agreed that this was an important motivator.


34

• Perceived motivations for clients not engaging in philanthropy. Advisers

in Australia and the U.S. were similar in that both agreed that important

reasons why clients did not engage in philanthropy was ‘they don’t think they

will have enough money left for their children’, ‘they perceive their wealth to

be smaller than it is’ and ‘they don’t think their gifts will be used wisely’. They

differed in that Australian advisers perceived another important motivation for

clients not to engage in philanthropy was ‘they don’t think they will have

enough money for themselves’ but this was not rated as important by U.S.

advisers.

• Resources for philanthropic planning. Advisers in Australia and the U.S.

were similar in that the majority of advisers in both countries rated seminars/

training and advice from colleagues as important. As well, both rated the

following resources as generally helpful:

o philanthropic-related materials to share with clients;

o sample documents from private foundations;

o a single volume of philanthropic options;

o case histories;

o ‘how to’ articles in professional journals; and

o sample fund agreements with community foundations.

Similarly, Australian and U.S. advisers did not think that mentoring by

telephone would be particularly helpful.

They differed in the following respects:

• The majority of advisers in Australia rated both retirement planning

or charitable giving software and articles in professional journals

as unimportant, while U.S. advisers saw these as important;


35

• Australian advisers were strongly divided in the worth of advice

from planned giving professionals, whereas U.S. advisers agreed

with it.

• The majority of advisers in Australia did not think a telephone help

line for advisers at the local community foundation would be

helpful, unlike U.S. advisers who saw this as potentially useful.

Overall, TPI’s 2001 study indicates an increasing openness by financial advisers in

the U.S. to discussing the philanthropic needs of their high net worth clients,

increasing interest in how this can be done in a sensitive, professional way, and a

growing engagement by financial advisers in philanthropic planning, compared to

earlier U.S. studies. There are no earlier Australian studies for comparison but this

study suggests Australian financial advisers lag behind their U.S. counterparts in

embracing financial solutions for clients wishing to engage in philanthropy.

Nevertheless, there are signs that some Australian advisers are wanting to do more

to meet their clients’ needs in this area.

6.0 Discussion

The results of our survey can be set in context with reference to similar studies in the

United Kingdom and United States. U.S. surveys suggest that high net-worth

individuals want to make gifts to charities but do not always know how, and they

perceive financial advisers as lacking information about philanthropic options

(Weems, 2002; Stone and McElwee, 2002). Indeed, while Americans are generous

givers in comparison to other countries, the wealthy give a smaller percentage of

income than those earning less than $20,000 a year (Giving USA, 1992).


36

Furthermore, post-World War 2 economic growth in western countries, and the U.S.

in particular, has guaranteed that large amounts of wealth currently in the possession

of the generation over 50 will pass to children and grandchildren in coming years, as

already noted. This has galvanised interest in patterns of intergenerational transfer of

wealth, especially in the U.S. (Karoff, 1994). Moreover, the U.S. is already seeing

more individuals accruing wealth: from 1997 to 2000, IRS figures show the number of

individuals earning adjusted gross income of $500,000 to $1 million rose 51 per cent

and average assets grew by over 30 per cent to almost $5 million each (New Tithing

Group, 2003). The number of those earning adjusted gross incomes over $1 million

rose 66 per cent from 1997 to 2000 and average assets grew by over 32 per cent to

$20 million each (p.9). This expanding wealth of the affluent represents a rare

opportunity for charity funding to increase in the U.S, and a significant opportunity for

professional advisers to recommend beneficial techniques to facilitate this transfer

(TPI, 2000; Steinberg, 2004). The opportunity will only be realized if donors are

educated about their giving options (Prince, 2000).

In the U.K., there has been a similar interest in encouraging donors and informing

financial advisers. Levels of giving are estimated to have plateaued at an annual £6

billion, well below the target of £10 billion – or 1% of the Gross Domestic Product -

set by The Giving Campaign, a joint effort by U.K. organisations to increase the

amounts of money given to charities and to encourage a culture of giving that

improves the quality of life for others (www.givingcampaign.org.uk). The target looks

attainable compared with Germany’s 1.21% of GDP, and the USA’s 1.91%. Further,

Inland Revenue statistics suggest that wealth in the U.K. trebled between 1982 and

1997, while both individual and corporate tax rates were reduced. Specifically,

planned giving is attracting growing attention as it generates only £0.5 billion of £6


http://www.givingcampaign.org.uk/

37

billion given to charities in the U.K. One aim of The Giving Campaign, which was

established in 2001, has been to encourage advisers to be more proactive in

advising their clients about the benefits of tax-efficient donations and to assist them

in thinking strategically.

Despite a need by clients for sound counsel about philanthropy and a greater

willingness by advisers to discuss the issue of giving with them (as the U.S. TPI

survey, upon which this Australian study was based, indicates), there are difficulties

for financial advisers wishing to develop their competencies in this area.

In the U.K., financial advisers work in a culture which neglects the giving of advice

about tax-efficient or planned giving to charity: the prevailing attitude appears to be

that they are there to maximise income for the client (and this was what clients

expected) (www.givingcampaign.org.uk). As a result, most adopted a passive stance

in dealing with their clients about philanthropy.

Indeed, even if they were interested in being more proactive, there were challenges.

U.K. advisers generally perceived themselves ill-equipped to offer such advice. They

did not want to embarrass clients who did not want to give, and they felt they lacked

information and training about charitable giving (The Giving Campaign, 2001).

Approximately half of the financial advisers who reported little or no knowledge about

planned giving were from small companies of five employees or less – emphasising

the potential benefits of a network outside of the immediate collegial environment to

offer information in this area. While advisers still expressed the traditional view that

they waited for clients to be more active in seeking philanthropic advice, one

interesting factor to emerge was the interest that financial advisers expressed in

learning more about philanthropic planning in order to ‘do a good job for their clients’

(The Giving Campaign 2001, p.3). For example, the majority of advisers said they


http://www.givingcampaign.org.uk/

38

were likely to use resources such as publications directed either at themselves or to

be given to clients, if they were available (The Giving Campaign, 2001).

The latest U.S. data provide signs of a change towards greater proactivity by

financial advisers in that country (TPI, 2000). However, the shift is not conclusive. In

follow-up, in-depth interviews conducted as part of the TPI study, more than half of

the U.S. advisers still felt philanthropy was too personal and risky to discuss, at least

with some of their clients. They were nervous about handling client conversations

around donor values and motivations. They also felt they lacked information about

products and tended to restrict themselves to a limited suite of giving mechanisms.

(TPI, 2000.)

Overall, the majority of both U.S. and U.K. advisers expressed a desire to learn more

about how to make conversations about giving effective without making the client

uncomfortable and wanted more, and better, materials to facilitate discussion and

education.

The results of this Australian-based survey suggest that this is the situation here, too.

Even accounting for the different cultures and taxation environments of the U.S., the

U.K. and Australia, relatively few affluent Australian clients appeared to be engaging

in planned giving or planning to establish legacies. Further, they appeared to be

underutilising tax-effective charitable vehicles. There is no suggestion that they do

not find the same personal satisfactions in giving as those in the U.S. or the U.K. as

they are making donations to charity, as the ATO figures indicate (CPNS, 2004).

There appears to be a need by high net worth clients for advice about the optimum

strategies they can employ, a need that will increase as the impact of

intergenerational transfers of wealth are felt.


39

Further, Australian financial advisers reflect the behaviour of their U.K. counterparts:

they are not actively raising philanthropy as a topic with high net worth clients, nor do

they appear to want to do so (at least in any clumsy way). However, many Australian

advisers do see the potential to learn more about philanthropic planning through

seminars and training, and wish to have access to more and better philanthropic

resources, sharing an interest in philanthropy with both their U.K. and U.S.

counterparts.

Like advisers in these countries, Australian financial advisers are generally interested

in developing contacts and knowledge that better equip them about meeting the

philanthropic needs of clients. They like the potential of seminars and training for this,

as well as the sharing of information that came from colleagues and philanthropic

clients. Further, they see the primary types of resources that would assist them as

material to give clients, a guide to philanthropic options, sample agreements, case

studies, and ‘how to’ articles, keeping in mind their professional concerns and needs

not to be ‘sold to’ nor not to ‘sell’ to their clients. All of these reflect the needs and

interests shown by overseas colleagues. This is a latent interest in philanthropy,

then, rather than an active one for Australian financial advisers.

7.0 Future research

This study was intended as a preliminary study of the role of financial advisers and

philanthropy within the Australian context. It is recommended that these findings be

checked through a study with a greater number of professional advisers, and also

include qualitative research such as focus groups or in-depth interviews. Such an

extended study will enable more comprehensive analysis and for richer patterns of

adviser experience, attitudes and behaviour to be understood, especially for different

types of advisers.


40

For example, in the current study, statistical analysis was unable to show differences

between types of advisers due to relatively low numbers of advisers assisting clients

with philanthropic giving. Further research is recommended to better understand

adviser motivations for not raising philanthropy as a topic with clients, as well as to

identify the needs of advisers who do advise clients about philanthropy and/or who

are most interested in doing so.

Interestingly, while advisers agreed with many of the potential reasons that clients

might engage in philanthropic giving, as well as strong support for the potential

reasons that clients might not give, they were more circumspect about their own

behaviour. There were few clear reasons for why advisers did not raise the topic of

charitable giving, for example, which suggests that there would be value in obtaining

qualitative data in further research for advisers could provide insight into the advisers’

perspective. Two exceptions were that raising the topic may be uncomfortable for

clients and that the client had not expressed charitable interests in the past. Also,

advisers were divided on whether a lack of personal knowledge of the tools of

charitable giving was a factor. As to timing, the key trigger for discussing philanthropy

with clients was for clients themselves to flag a need in this area.

9.0 Conclusion

This was arguably the first Australian study to specifically investigate financial adviser

behaviour and attitudes towards planned philanthropy, including their perceived role

in assisting clients achieve charitable aims. As such, it provides a valuable base for

monitoring the changes that are likely to occur in the advisory field over the next

decade and more. It also provides a platform for further investigation, so that


41

differences between types of advisers and their needs for philanthropic resources are

better understood.

In conclusion, this study suggests some clear differences and similarities between

advisers in Australia and overseas, putting aside differing legislation and tax

regulations which ensure some differences in study findings. The most obvious

differences between Australian advisers and those in the U.S. relate to their current

orientation: U.S. advisers report more overt interest in philanthropic planning and

suggest they are increasingly proactive in this area. This study suggests that this is

not the case in Australia. At the same time, financial advisers in Australia appear

similar to those in the U.S. and the U.K., in that many feel ill equipped or reticent for

reasons of ethics or professionalism to broach the topic of charitable giving with

clients. Even in the U.S. where attitudes appear to have shifted in recent years,

advisers still express some reluctance in assisting clients in this area.

There is also similar interest across all three countries in a variety of resources that

could help them develop knowledge about philanthropic options, with the only real

differences being that U.S. advisers nominated more types as beneficial.

Findings suggest that Australian financial advisers are not currently enthusiastic

supporters of philanthropic planning but there exist several avenues by which their

awareness and knowledge may be developed. Further, they are similar in many ways

to U.S. and U.K. advisers, and trends occurring overseas may be seen here in the

near to mid future.


42

References AMP. 2003. Wealth and Inheritance, AMP.NATSEM Income and Wealth Report, Issue 5, June. Australian Taxation Office. 2003. Selected Items by Age, Sex, Taxable Status and Grade of Taxable Income, Figures from the 1999-2000 Financial Year. Supplied by request to the Centre of Philanthropy and Nonprofit Studies, QUT, Brisbane. Burrill, J.H. 2001. The Effects of Estate Tax ‘Repeal’ on Philanthropy, Trusts & Estates, 140 (10): 20. Centre of Philanthropy and Nonprofit Studies (CPNS). 2004. Tax Deductible Giving in 2000-01, Current Issues Information Sheet 2004/02, Brisbane. Centre of Philanthropy and Nonprofit Studies (CPNS). 2003. Draft Report: 2002 Financial Advisers’ Study, Brisbane. Havens, John J., Paul G. Schervish and Mary A. O’Herlihy. 2003. 2003 Survey of Planned Giving Vehicles, Boston: Social Welfare Research Institute, Boston College. Havens, John J. and Paul G. Schervish. 2003. Why the $41 Trillion Wealth Transfer Estimate is Still Valid: A Review of Challenges and Questions, Boston: Social Welfare Research Institute, Boston College. Joffe, J (Lord). 17 July 2001. Speech to the ICFM Convention. The Giving Campaign website. www.givingcampaign.org.uk/news. (accessed 22 August, 2002). Kelly, S. 2002. Simulating Future Trends in Wealth Inequality, Paper presented to the 2002 Annual Conference of Economists, Adelaide, South Australia, October. Karoff, H.P. 1994. The advisor’s role in philanthropy: A new direction, Trusts & Estates, 133 (4): 47-50. National Association of Fund-Raising Executives. 1992. Giving USA. Cited in Karoff, H.P., 1994: p. 2. Prince, Russ A. 1998. Charitable market is huge opportunity, National Underwriter, 102 (43), 53-54. Rooney, P.M. and Tempel, E.R. 2001. Repeal of the estate tax and its impact on philanthropy, Nonprofit Management & Leadership, 12 (2): 193-211. Steinberg, R. 2004 see www.iupui.edu/~econ/faculty/steinberg.html Steinberg, Margaret A. and Lara Cain. 2003. Putting paid to prescribed roles: A new era for Australian women and philanthropy, Third Sector Review, 9 (1). Stone, Deanne and Jan McElwee. 2004. What California Donors Want In Their Own Voices, Washington D.C: National Centre for Family Philanthropy. The Giving Campaign. 2001. Advice Worth Giving? A Summary of a MORI Survey on the Role of Financial Advisers and Related Professionals in Providing Client Advice on Charitable Giving, London.


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The Giving Campaign. 2001. Lack of Information Stopping Financial Advisers Making The Most of Charitable Giving. www.givingcampaign.org.au. (accessed 7 August 2002). The Giving Campaign website. www.givingcampaing.org.uk. (accessed 7 August 2002). The Giving Campaign. 2003. Charity Financial Products: A New Approach to Giving, London. The Giving Campaign. 2004. A Wealth of Opportunity: How the Affluent Decide the Level of their Donations to Charity, March, London. The Independent Sector. 1992. Giving and Volunteering in the U.S. Cited in Karoff, H. P., 1994: p. 2. The Institute for Philanthropy. 2003. Report of a Seminar on the Role of the Financial Adviser in Encouraging Philanthropy, Tuesday 29 April. http://www.instituteforphilanthropy.org.uk/sum4.html (accessed 20 January 2004) at The Philanthropic Initiative, Inc. (TPI). 2000. Doing Well by Doing Good - Improving Client Service, Increasing Philanthropic Capital: The Legal and Financial Advisor’s Role, Boston. The Philanthropic Initiative website. www.tip.org. (accessed 13 August 2002). Weems, Christopher. 2002. Wealth advisers have a big opportunity in charitable giving, Trusts and Estates, 141 (3): 56. www.iupui.edu/~econ/faculty/steinberg.html: Website for Professor Richard Steinberg, Department of Economics, Indiana University-Purdue University Indianapolis, U.S. Accessed 27 April 2003.


http://www.instituteforphilanthropy.org.uk/sum4.html

http://www.tip.org/

http://www.iupui.edu/%7Eecon/faculty/steinberg.html

44

CONFIDENTIAL

CENTRE OF PHILANTHROPY AND NONPROFIT STUDIES The Professional Adviser’s Role in Philanthropy Questionnaire Thank you for agreeing to participate in this project. By completing and returning this questionnaire you are indicating that you:

• have read and understand the information provided.

• have had any questions answered to your satisfaction.

• understand that if you have any additional questions you may contact the Chief Investigator or Research Assistant.

• understand that you are free to withdraw your offer of participation at any

time, without comment or penalty.

• understand that you can contact the researchers or the Secretary of the University Human Research Ethics Committee (07 3864 2902) if you have concerns about the ethical conduct of the project.

Chief Investigator: Professor Myles McGregor-Lowndes Director Centre of Philanthropy and Nonprofit Studies Queensland University of Technology Ph: 07 3864 2936 Fax: 07 3864 9131 Email: [email protected] Research Assistant: Dr Lara Cain Centre of Philanthropy and Nonprofit Studies Queensland University of Technology Ph: 07 3864 9282 Fax: 07 3864 9131 Email: [email protected]


mailto:[email protected]

mailto:[email protected]

45

The Professional Adviser’s Role in Philanthropy Questionnaire SECTION A Q.1 In the past year, approximately how many clients with a net worth of $2

million or more, or an annual income in excess of $500,000 or more, have you advised?

Insert number

Q.2 Of the clients that you advise with a net worth of $2 million or more, to what percentage are you the principal financial adviser?

%

Circle your response

Q.3 Is it your policy to ask clients about their interest in charitable giving or philanthropy? Yes No

Q.4 With about what percentage of your high net worth clients have you discussed philanthropy or significant charitable giving?

%

Q.5 What percentage of your high net worth clients use the following methods for their philanthropic giving?

– Private foundations or charitable trusts governed by trustees, including your clients themselves?

%

– A community foundation? %

– Donor-advised funds at a trust company, such as Perpetual Trustees.

%

Q.6 What percentage of your high net worth clients do a substantial amount of direct charitable giving, other than through the mechanisms in Q.5 above?

%

Q.7 As far as you know, what percentage of your high net worth clients intend to have charitable trusts or private foundations created at their deaths, or make substantial charitable bequests?

% SECTION B


46

On a scale of one to five, where one means not important and five means very important, how important are the following reasons to you in choosing to discuss charitable giving and philanthropy with clients? Circle your response.

Not important

Very important

Q.1 It is important for people to make a difference if they can.

1 2 3 4 5

Q.2 Charities can use the money more wisely than the government will if it goes to taxes.

1 2 3 4 5

Q.3 The client can find personal or family satisfaction in giving.

1 2 3 4 5

Q.4 By planning wisely, charitable giving can reduce taxes.

1 2 3 4 5

On a scale of one to five, where one means not important and five means very important, how important are the following reasons for not raising the topic of charitable giving and philanthropy with your clients? Circle your response.

Not important

Very important

Q.5 I don’t feel comfortable talking about the topic. 1 2 3 4 5

Q.6 It’s not my job to raise the topic. 1 2 3 4 5

Q.7 Raising the topic would be uncomfortable for clients.

1 2 3 4 5

Q.8 I worry that the client will question my motives. 1 2 3 4 5

Q.9 The client has not expressed charitable interests in the past.

1 2 3 4 5

Q.10 I lack familiarity with a client’s personal life or values.

1 2 3 4 5

Q.11 I lack personal knowledge of tools of charitable giving.

1 2 3 4 5

Q.12 I don’t have personal experience/history with charitable giving.

1 2 3 4 5

SECTION C Do you agree or disagree with each of the following statements? Circle your response.


47

Stro

ngly

ag

ree

Som

ewh

at a

gree

Som

ewh

at

Stro

ngly

di

sagr

ee

Don

’t kn

ow

Q.1 I only discuss charitable giving when the client expresses an interest in it first.

1 2 3 4 5

Q.2 I am more likely to raise the subject of philanthropy when I have detailed knowledge of my client’s financial picture.

1 2 3 4 5

Q.3 I often raise the subject when a client is regularly volunteering his/her time in the community.

1 2 3 4 5

Q.4 I often raise the subject of philanthropy if there are more assets than needed.

1 2 3 4 5

Q.5 Is there a particular asset level at which you would encourage your clients to consider charitable giving?

Yes

1

No

2

Don’t know

3

Q.6 If yes, what is that level? Circle one response

(i) $500,000 or below 1

(ii) $500,001 to $1,000,000 2

(iii) $1,000,001 to $2,000,000 3

(iv) $2,000,001 to $5,000,000 4

(v) $5,000,001 to $10,000,000 5

(vi) Over $10,000,000 6

Q.7 What do you believe are the most important reasons for engaging in philanthropy?

SECTION D As far as you know, how important are each of the following reasons for giving to your client who engages in significant charitable giving? Circle your response.


48

Ver

y im

porta

nt

Som

ewha

t im

porta

nt

Not

ver

y im

porta

nt

Not

im

porta

nt

Not

sur

e

Q.1 They have religious or spiritual motivations. 1 2 3 4 5

Q.2 They want to improve their community. 1 2 3 4 5

Q.3 They want to enhance their personal or family name in the community.

1 2 3 4 5

Q.4 They want to publicise or create good will for their business endeavours.

1 2 3 4 5

Q.5 They care greatly about a cause, issue or institution.

1 2 3 4 5

Q.6 They have a tradition of family giving. 1 2 3 4 5

Q.7 They want to create a legacy for their family 1 2 3 4 5

Q.8 They are asked by a business or social acquaintance to whom they cannot say no.

1 2 3 4 5

Q.9 They see tax benefits in the gift. 1 2 3 4 5

Q.10 Other. (please specify)


49

SECTION D (Continued) As far as you know, how important are each of the following reasons to your client who decides NOT to engage in philanthropy? Circle your response.

Ver

y im

porta

nt

Som

ewha

t im

porta

nt

Not

ver

y im

porta

nt

Not

im

porta

nt

Not

sur

e

Q.11 They don’t think their gifts will be used wisely. 1 2 3 4 5

Q.12 They don’t think they will have enough money left for themselves.

1 2 3 4 5

Q.13 They don’t think there will be enough money left for the children.

1 2 3 4 5

Q.14 There is no tradition of family giving. 1 2 3 4 5

Q.15 They do not know their passions. 1 2 3 4 5

Q.16 They don’t think it will really make any difference. 1 2 3 4 5

Q.17 They perceive their own wealth to be much smaller than it actually is.

1 2 3 4 5

Q.18 They fear that greater giving will trigger an uncontrollable flood of appeals.

1 2 3 4 5

Q.19 They lack the time. 1 2 3 4 5



50

SECTION E How important have each of the following resources and materials been in helping you advise your clients on philanthropy? Circle your response.

Ver

y im

porta

nt

Som

ewha

t im

porta

nt

Not

ver

y im

porta

nt

Not

im

porta

nt

Not

sur

e

Q.1 Seminars and training. 1 2 3 4 5

Q.2 Professional journals. 1 2 3 4 5

Q.3 Stories told by other donors. 1 2 3 4 5

Q.4 Retirement planning or charitable giving software. 1 2 3 4 5

Q.5 Advice from planned giving professionals. 1 2 3 4 5

Q.6 Advice from colleagues. 1 2 3 4 5

Q.7 Are there any other resources and materials that are important in helping you advise your clients on philanthropy? (please specify)

Q.8 What organisations, if any, have been most helpful to you in advising your clients on philanthropy? (please specify)

Q.9 What kind of information resources would be helpful to you in working with your clients around philanthropy or charitable planning? (please specify)


51

SECTION E (Continued) How helpful are, or would be, the following resources and materials in working with your clients on philanthropy? Circle your response.

Ver

y he

lpfu

l

Som

ewha

t he

lpfu

l

Not

ver

y he

lpfu

l

Not

hel

pful

at

all

Not

sur

e

Q.10 “How to” articles in professional journals. 1 2 3 4 5

Q.11 A single volume providing an overview of philanthropic options.

1 2 3 4 5

Q.12 Sample fund agreements with community foundations.

1 2 3 4 5

Q.13 Sample documents for private foundations. 1 2 3 4 5

Q.14 Educational materials about philanthropy to share with clients.

1 2 3 4 5

Q.15 Case histories. 1 2 3 4 5

Q.16 Interactive Web site. 1 2 3 4 5

Q.17 Telephone help line for advisors at the local community foundation.

1 2 3 4 5

Q.18 An email Listserve devoted to developments in charitable giving.

1 2 3 4 5

Q.19 Mentoring by telephone. 1 2 3 4 5



52

SECTION F

Circle your response. Yes No

Q.1 Leaving aside conversations with clients about their interest in philanthropy generally, do you develop strategies for helping clients develop a focus for charitable giving?

1 2

Q.2 Do you refer clients to other parties who can help them with such tasks?

1 2

Q.3 If yes, to whom do you refer them? (Circle all applicable)

Lawyers 1

Specific charity 2

Foundations – Charitable/Community 3

Accountants 4

Planned giving professionals 5

Organisations/Charitable Organisations 6

Other (please specify) 7

Yes No

Q.4 Do you personally engage in substantial charitable giving? 1 2

Q.5 What is your age group?

Under 40 1

41 – 50 2

51 – 60 3

61 – 70 4

Over 70 5

Q.6 How many other professionals work in your office?

(i) None 1

(ii) One 2

(iii) Two 3

(iv) 3 – 5 4

(v) 6 – 10 5

(vi) 11 – 20 6

(vii) 21 – 50 7

(viii) 51 – 100 8

(ix) More than 100 9


53

(x) Don’t know 10 SECTION F (Continued)

Circle your response. Yes No

Q.7 If a network of professional advisers were to be formed to promote the growth of charitable giving and philanthropy and to identify resources that would be useful to advisers, with absolutely no fund raising purpose or connection with any commercial interest, and with strict rules of confidentiality as to membership, would you be interested in participating?

1

2

Q.8 Are you Female Male

1 2 THANK YOU for completing this detailed questionnaire. Please return in the enclosed reply paid envelope by 8 November 2002. Centre of Philanthropy and Nonprofit Studies Faculty of Business GPO Box 2434 BRISBANE QLD 4001


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