The role of advisors

Advisors are identified as key players in promoting philanthropy, yet their potential is woefully untapped for a number of reasons. These issues are being addressed by a newly-convened UK steering committee that is working on a plan to give advisors the fire-power to engage with donors and better serve their needs.

“Although the past decade has seen a significant increase in philanthropy in the UK, giving is still not embedded into the culture of this country. We need to ensure that philanthropy advice is promoted as widely as possible, with the highest standards of best practice, so that wealthy individuals will give more and think more about the impact of that giving.”

Dame Stephanie Shirley, philanthropist and the world's first ambassador for philanthropy, makes the call in her role as chair of a newly-convened philanthropy advice steering group working to develop and encourage the take-up of philanthropy advice services for wealthy individuals. It comprises representatives from over 30 private client advisory and specialist philanthropy advisory organisations.

It’s agreed by most involved in promoting philanthropy advice that client advisors have a vital role to play.

In its paper, The Business of Philanthropy, which sets out a plan to develop the full potential of the philanthropy advisory market, non-profit think tank New Philanthropy Capital (NPC), says, “Most wealthy individuals have regular contact with a private banker, an accountant or a lawyer, so these advisors are a natural first port of call for clients wanting help with many aspects of their lives, including their giving. Indeed, many private client advisors are already providing some assistance on giving, in the form of tax advice and structuring of foundations or trusts.

“The private client industry is therefore a crucial part of the market for philanthropy advice. Private client advisors have the best access to donors; they can help clients navigate the most appropriate options; and they can build demand for advice from those who have not thought about the benefits of philanthropy. If this industry does not work as well as it might, the philanthropy market will not thrive.”

Dr Eleanor Shaw, reader in marketing at Strathclyde University, part of the Centre for Charitable Giving and Philanthropy (CGAP), agrees, “Advisors are the gatekeepers of knowledge and key influencers and it is imperative they are well-versed and knowledgeable about the services, tools and information available.”

Research  shows there is a pent-up demand for good advice about philanthropy. Yet, the NPC report says, “Not enough advisors are proactively offering philanthropy services to their clients. What is more, where advice is offered, the quality is at times questionable. As the head of one private bank told us: ‘Our bankers know their stuff, but it’s amateur time when it comes to philanthropy discussions’.”

There are a number of reasons.

On the supply side, many private client advisors do not know enough about the sector, and others are unwilling to share information about best practice. Many see philanthropy as a ‘taboo’ subject and are too embarrassed to raise it with their clients. Another barrier is the striking lack of innovation in products and services offered to philanthropists in the UK, though this is starting to change (Promoting philanthropy – the role of innovation).

NPC believes by building the supply of excellent philanthropy advice, demand for it will grow. Its CEO Martin Brookes cites a range of examples, including 16th century France, where Catherine de Medici introduced the fork to the French court after starting to use it to eat her food. Others soon imitated the queen and stopped eating with their fingers. A more modern success for supply-side economics would be Apple’s marketing of the iPhone.

“History provides plenty of examples of supply-led innovations and I don’t see why philanthropy should be different,” says Brookes.

NPC’s Plum Lomax, who co-authored The Business of Philanthropy paper, explains, “There is a fantastic opportunity being missed by many banks, law firms and family offices. Clients are now coming to expect their advisors to help them with their philanthropy, yet very few advisors have worked out how to do it well. Those who are supporting their clients’ giving are beginning to reap the benefits, increasing their revenue and deepening client relationship.”

The paper also calls for the professionalisation of the philanthropy advice market, with the aim of helping to build the trust and confidence of donors in using services. 

Paul Knox, head of UK wealth advisory at JP Morgan, a member of the steering committee, says, “We are seeing a burgeoning market for philanthropy advice and there is a pent-up demand for people to give more effectively. At the moment, the philanthropy advisor market is unregulated, and anyone can call themselves a ‘philanthropy advisor’ without any formal training or experience.

“We want to see a more cohesive philanthropy market developing with a recognised qualification and a minimum standard.”

On the demand side, the difficult economic climate is making some donors reluctant to discuss giving, and personal philanthropy is still a private and even taboo subject in any case. Some donors do not care enough about the impact of their giving, and many of those who do care about impact are not aware that advice is available. Others are unclear of the value of philanthropy advice.

NPC head of strategy Tris Lumley says, “Giving away money in a way that aligns with a donor’s ambitions and achieves the greatest impact is a very difficult thing to do, yet when we ask donors if they want help the answer is often ‘no’. They do not necessarily perceive a problem – a gap between the impact they achieve on their own and how they can greatly increase that with good advice, while advisors are not clear on how offering philanthropy advice can benefit their own businesses. From both a supply and demand perspective what we need to do is to ‘build the burning platform’; and show how staying where we are is not an option, We need to force change around these areas and shift the mindset of donors and client advisors on this issue.”

The steering group, which embodies the findings of The Business of Philanthropy paper, identifies four specific issues which if addressed could, it believes create a ‘tipping point’ in philanthropy advice, namely:

• Stating a clear case – the benefits of advice to the donor
• Where to go to get advice
• Educating wealth advisors
• Ensuring these advisors understand the business case for philanthropy advice.

One of the ways being considered to meet these aims is through a marketing campaign, and a steering group sub-committee is considering how best this could be done.

Third sector marketing expert Lee Jackson, of integrated creative communications agency The Team, which has produced many campaigns for the non-profit sector, offers some advice. “Advisors will be seen by donors as another barrier between the charity and the donor and paying for their services will be seen as taking funds away from a good cause.

“Advisors therefore have to prove the value they can add to a donor’s philanthropy. The decision for the donor has to be a ‘no brainer’ – they have to think ‘why wouldn’t I use this service?’

“There is a need to build trust and confidence between donors and advisors and advisors will need to demonstrate their credibility and knowledge of philanthropy. It all takes time and marketing is best done through conversations that begin with the donor’s interests. It’s about building a relationship with the donor first, ensuring you understand their individual needs. Someone isn’t going to marry you after a first date – you need to get to know each other first.”

Jackson agrees with NPC’s view that one-to-one media channels such as direct marketing, peer-to-peer and face-to-face opportunities would work best in facilitating relationships, while credibility and knowledge can be demonstrated through channels such as blogs, forums and other social media.

In considering the message of a marketing campaign around philanthropy advice Jackson says ‘investing in effective philanthropy’ might be a better sell than asking donors to ‘pay for advice’.

In fact Merrill Lynch-Capgemini’s World Wealth 2010 report, published at the end of June, says explicitly that philanthropists are increasingly seeing philanthropy as an investment and incorporating their giving strategies into their ongoing wealth accumulation and capital-preservation plans. “They are making more investments rather than gifts and looking at their philanthropy just like they would look at their investment portfolio, including looking for a return on every dollar.”

Lumley agrees the language of investment may work well. “We need to talk to donors about investing in their philanthropy. Donors understand they need advice on their investments – so why not social investments? Speaking the language of the donor is key to better communication.”

Barclays Wealth head of client philanthropy Emma Turner takes a pragmatic view on how quickly these aims may be achieved, not withstanding social marketing pioneer Philip Kotler's belief in the power marketing can have on shaping behaviour (see The role of marketing). She says “It may take a while before philanthropy advice becomes the norm but you cannot rush human nature. Maybe the next generation will automatically accept the need and usefulness of philanthropy advice - perhaps in part that is what we are working towards.”