From my observations, the members of a gift planning team most likely to clash are the development professional and the investment advisor.
From the development professional’s perspective, the advisors treat philanthropy as a product to be marketed and sold with insufficient understanding of a donor’s philanthropic objectives. Gifts are often “presented” to the charity as “done deals” with little or no input from legal or tax counsel. Gifts structured through abusive techniques, such as “charitable split-dollar,” can be the result when the “product” is, in fact, not about philanthropy. Other times, legitimate techniques are diluted when charitable remainder trusts are designed with high payout rates barely meeting the 10% residuum requirement. Even a simple charitable gift annuity can be complicated by funding through an intermediary charity controlled by a financial institution.
From the advisor’s perspective, the charity’s development office is not grateful for such gifts from donors who “weren’t even on the radar.” Like any professional, advisors do not appreciate being asked to “waive their fees and commissions,” especially when they have no affiliation or relationship with the institutions.
What can each do to earn the cooperation of the other? Both parties should be laser-focused on meeting the philanthropic goals of the client and should avoid trying to control the planning process and, by extension, the donor. Err on the side of simplicity when considering the structure of the gift and the asset funding it. Over the years, I have seen the establishment of charitable remainder trusts by donors who did not need the income and life insurance programs whose premiums did not “vanish.” Both the donor and the charities would have been better served if development professionals and advisors had collaborated on the gift’s structure. Whenever possible, the development professional should help advisors understand the philanthropic motivations of their supporters.
When each party focuses on charitable intent with full disclosure of risks of certain techniques, conflict will be minimized.
By Professor Christopher P. Woehrle, Chair & Professor of Tax & Estate Planning Department, College for Financial Planning, Centennial, Colorado
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