Advising The Modern Philanthropic Client

We face the greatest generational wealth transfer in history as Baby Boomers transition from wealth accumulation to retirement. In the U.S., older generations will transfer $124 trillion by 2048. About half will first go to spouses, mostly widows, and then most will go to younger generations. Around $18 trillion will be donated to charities.

Many clients want to help solve the complex challenges they see in their communities and worldwide, including climate change effects and disparities in housing, economic mobility, health, and education.

The inheritors–women and younger generations–want to use a bigger social impact toolkit to solve those challenges. In addition to charitable giving, they’ll be more likely to use their investments and voices as activists and shoppers. They’ll be more likely to start purpose-led businesses. And, they’ll create or inherit access to vehicles such as donor-advised funds and family foundations. 

The New Opportunity for Advisors

Older generations want advisors who can take them from “success to significance” in their lives and in their philanthropy. Inheritors will need advisors who can think holistically about social impact. Their advisors are second only to a spouse or partner as the most valuable source of information about philanthropy.

As an advisor, you are uniquely positioned to help clients purposefully and effectively deploy their financial, human, social, intellectual, and moral or spiritual capitals. But how will you navigate this dynamic social impact landscape and the changing expectations of a more diverse client base? 

Answering the evolving market demand requires a more contemporary approach to philanthropic advising. It starts with bringing a combination of heart and head to the conversations. Clients will expect help in discerning their motivations, values, vision, and goals to make a difference in the lives of others. 

Clients will then seek help exploring the broader toolkit of possibilities to deliver the social impact they desire. That toolkit starts with up-to-date technical knowledge of charitable giving tools and acumen in deciding when and how best to use them within various tax, estate, and financial planning strategies. Beyond that, they may seek help in related domains of family governance and next-generation engagement, creating philanthropic strategies that might include impact investments or advocacy and assessing their impact.

How Will You Grow Your Philanthropic Advising Competencies?

The new philanthropic advising roles will require confidence and competence with the broader social impact toolkit. They will also require the trust necessary to respectfully challenge clients, prompting deeper thinking about their values and social responsibility.

Earlier this year, Daylight shared the most comprehensive study of philanthropy advisors –anyone involved in navigating the who, what, why, and how of using resources for philanthropy and social impact, either as a full-time job or as part of their role as a wealth advisor, estate planner, or other professional. The report outlines the tools and capabilities contemporary advisors are bringing to clients. It also informs our development of new certification programs in philanthropic advising. 

You can be an indispensable partner in expanding your clients’ access to philanthropic advice, whether from you, others in your firm, or the growing number of specialists. As you start a new year, we encourage you to answer these questions:

• What new questions can I ask clients about generosity, purpose, and impact?

• What new philanthropic advising competencies should I develop to lean into that clients will need next?

• What specialists will my clients need in the next three years, and do I have enough qualified referrals to provide?

  
  

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