Look into your heart

Bruce Christie

Good people. Good values. Good business. Good practice.

This is the theory of a respected colleague of mine in the United States, Wayne Freeman of Dixon Financial Services in California.

He was talking to me about philanthropic giving and why it makes sense to provide proactive advice to your clients on how to give.

What he meant was that people who give tend to be good people, with whom it’s a pleasure to do business. They also make good clients, as they refer and can make your practice more rewarding and enjoyable, financially and personally.

It got me thinking about whether or not there are major differences between the United States and Australia, and whether his theory would work here.

In terms of raw data, the two countries look quite different. But then again, the US does have philanthropic giving statistics unrivalled in the western world.

According to the Giving USA Foundation, in 2006 Americans gave twice as much as the next most charitable country, donating a total of $US300 billion, 76 per cent of which was given by individuals.

While, unsurprisingly, high-net-worth individuals give the most, about 65 per cent of households with incomes of less than $100,000 per year also give to charity.

Of course, in the US there is a strong culture of philanthropy. This is partly based on the American tradition of individual autonomy and limited government, alongside strong religious beliefs and a tradition of civic participation. As an aside, religious donations in the US are tax deductible, unlike in Australia.

In terms of philanthropic giving as a percentage of gross domestic product (GDP), the US ranked first at 1.7 per cent. Number two was Britain, which gave 0.73 per cent, Australians gave 0.68 per cent, while France, with a 0.14 per cent rate, trailed such countries as South Africa, Singapore, Turkey and Germany.

But while Australia may lag behind in percentage of GDP, the trend for philanthropic giving is up, up and up.

Commissioned by the Australian Government on behalf of the Prime Minister’s Community Business Partnership, the Giving Australia: Research on Philanthropy in Australia report showed that the value of individual giving, $5.7 billion in 2004, had increased 88 per cent since 1997, with 87 per cent of all adults donating money to community causes each year.

While Australian individuals are giving more, our Government is increasingly unwilling or unable to provide the safety nets it did in the past. An ageing population with its accompanying strain on our health system will only make this situation worse.

Suddenly, we are starting to look more like our cousins across the Pacific. We are giving more, our Government is giving less and, like our American friends, we are becoming more and more affluent.

It’s incredible to contemplate that there are 134,000 millionaires in Australia alone, and in the US the number of those with $10 million or more in personal assets has grown to 338,000, up 10-fold in the 10 years to 2001.

As professional financial advisers, we are faced with the unprecedented situation of people having more money than they require or wish to leave to their children.

At the same time, these people are clearly recognising the need for philanthropic giving and are genuinely interested in wanting to do more.

So what’s stopping us?

Culturally, our US counterparts are about 10 years ahead of us in the provision of philanthropic advice.

Yet, even they have struggled with the same barriers and concerns voiced by many Australian advisers, such as discomfort in discussing client values and interests and a lack of confidence in their own ability to provide quality advice.

But for those advisers with the courage and conviction, the benefits are there.

Talking about philanthropic giving to your clients enables you to deepen and strengthen your relationship with them in a number of ways, for example:

> Firstly, discussing long-term and heartfelt personal goals is an opportunity to cement your relationship with your client.

> Demonstrating that you have the knowledge and willingness to advise on philanthropic giving will clearly build a stronger and more enduring relationship with your client; the sort of relationship that often leads to referrals of other family members and friends.

> Discussing philanthropic and other wealth transfer issues often opens the path to a variety of other investment opportunities and, certainly, potential increases in funds under management.

> Finally, no matter where you are in the world, working with good people who like giving is often a mutually rewarding experience — good for them, good for you and good for the community.

For further resources and information you can join the Professional Advisers Group (for Sydney-based financial advisers, solicitors and accountants) by e-mailing me at [email protected] or by going to http://www.gatewayforgiving.com.au

Bruce Christie is an authorised representative of Centric Wealth and a director of the Sydney Community Foundation.