Increased regulatory scrutiny of the industry will impact how clients donate their wealth to charitable interests. Ann Limberg, head of philanthropic solutions and the family office for Bank of America’s elite U.S. Trust unit, discusses the firm’s approach and best practices for advisors.
What are some of the ways U.S. Trust is meeting increased regulatory demands that impact charitable giving for clients?
U.S. Trust continues to leverage and expand our institutional philanthropic advisory services providing advice on governance, best practices and supporting efforts towards compliance and transparency.
We also provide ASC 820 Reporting - industry leading report packet to support the FASB requirement of nonprofits to provide audited reporting on quality of assets in their investment portfolios.
For private foundations there is increased scrutiny of philanthropic activity (i.e., state/federal reporting requirements, foundation staff salary scrutiny, private inurnment/self-dealing issues). U.S. Trust sets out to provide the breadth of expertise and specialization to help clients navigate these challenges.
What types of clients does your firm work with?
We assist both private clients, who wish to allocate some or all of their wealth to strategic philanthropy, as well as nonprofits charged with the responsibility of efficiently deploying those funds to address society’s needs, problems and opportunities.
How do you work with these two groups?
We assist private clients by helping them formulate a giving plan, focus their giving to make the most impact and incorporate their giving strategy into their overall wealth management to effectively address both charitable and non-charitable goals and objectives.
For nonprofits, we help them grow their assets and manage their overall governance so that the nonprofits effectively and efficiently deliver the impact sought by their donors and constituents.
Can you go deeper into more how you engage nonprofits?
Donors hold nonprofits accountable for delivering effectively and efficiently on their mission. To do so, the nonprofit must have strong governance policies and procedures, a well-educated board (both on the organization’s mission as well as its operation). The nonprofit also should own the responsibility to develop resources and funds for the organization and manage those assets prudently for the long term sustainability of the organization, as well as its ability to make an impact. We bring a holistic view of all of these practices and offer that expertise, perspective and experience to the nonprofit.
What should advisors focus on when addressing the philanthropic needs of clients?
Charitable giving is important to clients and they are looking for their advisors to help manage their wealth, including that wealth allocated to charitable giving.
While tax deductions and other wealth management considerations are a factor in the philanthropic discussion, it is more about the motivation to make an impact on those values deemed important by the client.
Advisors that are adept at serving their client’s philanthropic needs have realized the importance of charitable giving to their client and are finding they are viewed as a trusted advisor, will attract more assets and/or more clients, will retain more clients, and will develop a positive reputation in their communities through their engagement in philanthropy.
What are the biggest philanthropy trends advisors should watch for this year?
Boomers will continue to seek opportunities for meaningful involvement through volunteerism, as Millennials and Gen X'ers begin to make their mark.
We can expect continued structural innovations including hybrid entities and private-public partnerships. We are also expecting an increased emphasis on impact investing tools and channels. To date, we have seen great awareness around this space without corresponding adoption, but we may begin to see a shift.
Impact investing is also becoming more popular with nonprofits that are looking to invest in ways that align with their mission. More nonprofits are evaluating and developing their own impact investing policies and are looking for solutions to meet the needs and demands of their constituent base.
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