Investing in Philanthropy

Why financial advisor Ryan McKeown includes charitable giving in his conversations with clients.

 
When Ryan McKeown meets with clients at Wealth Enhancement in Mankato, he asks the questions that most other financial advisors ask about current cash flow, expected income and goals for retirement. But then he pops another question as well: How much do they want to be able to give away, even in retirement?

“If you want to be able to continue a certain level of charitable giving after you retire, you should be planning for that now,” McKeown says. “If you want to be able to fund your giving for another 20 years, then I might recommend a strategy like starting a donor-advised fund now.”

That’s what McKeown and his wife, Jill, did. They want to be able to support the organizations that matter to them now—but they also want to have the capability and flexibility to give to other organizations in the future. They established a donor-advised fund with the Mankato Area Foundation to which they contribute annually and make small gifts as they are able. But they are looking forward to being able to continue making gifts for years to come.

“We know that we want to do something charitable, but we don’t know exactly what that will be,’ McKeown says. “This allows us to begin planning so that we will be able to do that.”

McKeown recognizes that traditional financial advising is investment driven; investments, he says, drive a client’s ability to sustain the lifestyle they desire. But for many clients, planning for charitable giving adds meaning to the returns they make on those investments. And when it comes with benefits as well.

“First, it helps them formalize their goal and achieve it,” he says. “Once they set the money for charitable giving aside, then they know that everything else is up for grabs. Psychologically, they feel better spending their money on trips and the grandkids, because they know that this is covered.”

Contributing to a donor-advised fund has tangible benefits, too.

“The icing on the cake is that you get big tax benefits when you establish the fund,” McKeown says. “You don’t have to wait until the funds are distributed—you get the tax benefit now.”

Not all financial advisors discuss charitable giving as part of their consultations, but McKeown believes that those conversations have has helped solidify his relationships with clients. That’s partly because it often has helpful tax implications. “Anything an advisor can do to lower someone’s tax liability is important,” he says. “I can’t promise you a certain rate of return on investments, but I can quantify the tax savings you’ll get.”

But his clients also appreciate the opportunities it creates to start thinking about their legacy. “Discussing charitable giving adds value to a client’s portfolio,” he says. “It provides more meaning to them.”