This article originally appeared on the FTAdviser website on 8 June, 2023.

By Nicole Sykes, Director of Policy and Communications at PBE

Last year, the proportion of people leaving a gift to charity in their will reached record levels, rising from 16% in 2014 to 24% in 2022.

This followed a determined campaign by charities and advisers, including initiatives such as Remember A Charity, involving collaborations with solicitors and independent financial advisers.

But why are people only getting great advice about how to give to charity when they die?

Philanthropy can bring purpose and meaning. The tax benefits of giving in life are substantially under-utilised – to the tune of £380 million per year on the donations which are made, according to the Law Family Commission on Civil Society.

The societal problems that philanthropy can help to address are urgent. And the Financial Conduct Authority (FCA) is currently developing its strategy to grow sustainable finance within regulated firms – a goal philanthropy is ideally placed to support.

For private banks, wealth managers and independent financial advisers, offering philanthropy services is also good business. Doing so offers an unrivalled opportunity to deepen relationships with clients, as well as their children and grandchildren.

Investment advisers in the US that provide charitable planning services have three times the median organic growth of those that do not, and 1.3 times the median new money per investor, data from Fidelity Charitable shows.

And with just 4% of high-net-worth individuals surveyed by Campden Wealth reporting that they are satisfied with current philanthropy services, there is a clear competitive edge on offer to advisers that get philanthropy services right. 

The business opportunity that philanthropy advice presents is only set to grow, as the widely-debated ‘great wealth transfer’ becomes a reality.

Younger generations have far higher expectations that their money will have a positive impact on the world. As the most impact-aligned form of capital – philanthropy – can deliver this in spades.

With a growing proportion of the industry anticipating the opportunity that the wealth transfer presents, a new market of philanthropy products is springing up.

Donor-advised funds are the leading option at present, and their use has skyrocketed.

These convenient giving vehicles allow individuals to receive the tax benefits of charitable giving immediately, and then to recommend how monies are distributed over time.

They are often used after significant sums are inherited, or received after a business is sold, and in the US in 2021 assets of $234 billion (£188bn) were under management in these vehicles, up from $113bn in 2017, according to the National Philanthropic Trust. 

Advisers wishing to support their clients with their philanthropy need to first know how to ask them if it is of interest, safe in the knowledge that even the act of asking about charitable intentions has been shown to increase giving.

But to learn how to ask well and what support to offer, advisers can take advantage of a burgeoning philanthropy education sector.

There are courses at universities like Kent, St Andrew’s, the London School of Economics and Bayes Business School, or through CPD-certified, CISI and Pimfa-endorsed courses at charity Philanthropy Impact.

Many advisers work through partners to deliver philanthropy services effectively. The most significant example of this is the Charities Aid Foundation, which has been supporting donors for almost a century.

More recently, a number of other innovative new partner options have launched, such as the Together Charitable Foundation – a charity founded by financial planners for financial planners – which has stepped in to create a platform that any adviser can use to help their clients administer a donor-advised fund.

Advisers who are struggling with clients frustrated by a lack of investment options offering sufficient environmental impact can turn to the Global Returns Project, which is taking a fund management approach to philanthropy.

There are also a growing number of private banks establishing expert philanthropy teams, however they currently need more of the advisers they support to be referring to them.

Though the opportunity and the benefits are significant, offering philanthropy services can be challenging.

It requires a person-centred approach to client management and not a traditional product-centred one. It requires discussions of a more personal nature about values and legacy, in addition to classic conversations of risk and return.

Occasionally, it requires pushing back against clients in order to truly support them to achieve their impact goals.

Ultimately, advisers have to step out of traditional comfort zones to offer philanthropy services. Doing so will reap rewards for them, their clients, and the world we live in.