The great news is out – 2012 giving was saved at the finish line. In recent articles around the country, we heard that Fidelity Charitable Gift Fund saw gifts to charitable accounts jump 24 percent to $3.6 billion in 2012 and The Boston Foundation’s Paul Grogan called it “a river of money” in December when it saw donations nearly triple in the last six months of year to $93 million.
This was a great relief to all after hearing a very dim giving prognosis for 2012: an estimated 1% growth before inflation. And the story behind the good news is that the great influx of gifts was driven by uncertainty about changes in the tax laws, particularly around the charitable deduction. And therefore, tax policy really matters.
So without diving into the debate about tax policy and charitable giving (and I do have some opinions there, which I will save for another time), what I think this holiday rush really shows is the enormous influence of professional advisors on high net worth giving. Financial and legal advisors did their job and stepped into high gear last fall to help their well-heeled clients plan and prepare for changes in the tax law. Conferences sponsored by boutique multi-family offices and high net worth advisors were teeming with pro-active plans to help clients accelerate their in-family and charitable giving plans. All the advisors we work with at TPI reported sleepless nights and working weekends to complete the volume of work.
Over the past 20 years, TPI has done a great deal of research on the role of professional advisors. We know that professional advisors are:
- Often the primary source of information for potential donors;
- Present at key transitions and transactions that serve as philanthropic turning points;
- Well positioned to take part in philanthropy decisions as part of a complete financial and estate plan;
- Knowledgeable and aware of the importance of legacy;
- Capable of raising tough questions to their clients;
- Thinking creatively about how to approach family issues through philanthropy.
We also know that there is still a great deal to be done to educate advisors about not only the benefits of giving for their clients, but the benefits to advisors themselves of giving charitable advice.
So, hurray for uncertainty in the tax laws! If it drives charitable giving then I’m all for it; but let’s take note that the drivers of this “river of money” were the advisors to the affluent.