lions of financially liberated retirees will find that their greatest joy will come through benefiting others. Many are ready now for the conversation that helps them determine how to build a legacy through the purposeful investment of their time, knowledge, energy, and fi- nancial assets.
For some people, developing a benevolence plan for leaving a fi- nancial legacy is as important as managing their investments. Many people feel a sense of stewardship regarding the wealth they possess.
As one client put it, “This money is just passing through my hands.
I’m the conduit, not the possessor, but I have a responsibility to make sure it flows in the right direction.” You will be able to quickly gauge the importance of charitable giving when asking your clients about their plans for benevolence. For some it is a nonissue; for others it is a priority—the motivating factor for earning more. For those who have not pondered charitable possibilities, you may spark an interest in charitable giving by bringing up the issue. For those who place a high value upon benevolence, you have communicated that you share their values and will partner with them to create the most re- sponsible and effective means of giving.
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FIGURE 15.1 Benevolence Survey—Designing a Financial Legacy 1. In what charities or causes do you feel impressed to invest your
time and energy?
2. What charities or causes do you currently contribute toward?
3. In what charities or causes would you like to invest financially?
4. Are there causes that you would like to support on a perpetual basis? On an annual basis?
5. Are there any family members for which you would like to develop an ongoing income stream (i.e., college fund for children, parental pension, funding for a disabled child or sibling, etc.)?
6. Are there any causes into which you would like us to look to make sure they are using charitable funds responsibly?
7. How often would you like to review your benevolence plan?
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The New Philanthropy
It is important to be aware of the fact that for many, charity starts at home. Their definition of charity may include college funds, wed- ding gifts, or down payments on homes for children or grandchil- dren. It may also include setting up a pension for aging parents who could greatly benefit from a few hundred extra dollars per month.
Advisor Bruce Bruinsma tells us that most people would be amazed at how much breathing room is created for retired parents with an additional $300 to $400 per month. Many prosperous baby boomers are looking for creative means of blessing their parents who may be experiencing some financial pressure in their autumn years.
The term philanthropist tends to conjure images of society’s elite who bequeath a portion of their tremendous wealth to large institu- tions such as hospitals, universities, and museums. However, current trends show that a growing number of philanthropists are ordinary people who share an extraordinary desire to give back and make a difference. The new philanthropist is also interested in a more hands- on approach to giving. (Sources: “The New Face of Giving,” by Lisa Fichenscher, Family Money, November/December 2000, and “Charity Gets Personal,” by Ronaleen R. Roha, Kiplingers Personal Finance, Sep- tember 2000.)
Instead of inherited assets, these new philanthropists are likely to bring their own earned income to their favorite causes and to give generously while still living. Another trend is to support human ser-
vices and community-based organizations rather than the larger, more prominent charities. In addition, this new generation of donors is demonstrating personal involvement by also contributing their time, energy, and expertise.
Likewise, the new philanthropists tend to be more results-oriented.
They carefully scrutinize their charities because they want to know how their gifts will be used. They expect measurable results from their philanthropic “investments,” and are also willing to donate their skills to improve such areas as management, accounting, and fund raising.
Philanthropists are also choosing nontraditional channels for giv- ing, such as giving circles, which operate somewhat like investment clubs in that members pool their money. The pooled funds help members have a greater impact on the causes they support and often allow more say in how those funds are used. Members of giving cir- cles typically contribute a predetermined amount each year and vote on how to dole out the pooled funds. In contrast, traditional foun- dations build up endowments and donate the interest.
Another tool favored by the new philanthropist is the donor- advised fund. Like giving circles, this is inexpensive to set up and allows a great deal of creativity. But unlike giving circles, this type of fund can be set up by an individual—somewhat akin to running a philan- thropic foundation. Funds such as the Fidelity Charitable Gift Fund or the Schwab Fund for Charitable Giving allow tax deductible do- nations to be deposited into the account from which the fund then issues checks (grants) to particular charities as directed. The admin- istration fee for supervising donations and handling bookkeeping varies, but generally ranges from .45 to 1.00 percent of the assets.