Creating a Charitable Plan For Your Client

Over the course of the fiscal year, many accounting professionals are tasked with creating a charitable plan for one or more clients. A solid plan brings order to giving, making it easier for clients to choose a focus and make meaningful contributions year after year. By working closely with the client to make the plan, you can create a strategy that fits into the client's financial and philanthropic goals.

1. Choose Causes

The first step in making a charitable plan is choosing the areas of impact. Sit down with the client and ask about his motivations for giving. Talk about his passions and identify specific areas for giving, such as refugee efforts or community arts. Ask the client about past gifts, and look for patterns and commitments to long-term giving. Select several categories, and make a list of the potential beneficiaries within each category. This step narrows the client's focus and helps clarify his desires.

2. Examine Tax Position

The client's tax position can have a significant impact on the charitable plan. Assess the client's income, assets and current tax standings. Identify the amount that the client can afford to give in cash, securities and other assets. Consider both the short-term implications, such as the effect on the client's yearly itemized deductions, and the long-term effects, such as adding a donor-advised fund to an estate plan. Based on the individual's unique position, choose the giving vehicles that increase benefits for the donor and the recipient.

3. Create a Team

When your client has a complex estate, a large business or an unusual financial situation, the charitable plan is likely to impact other areas of his personal and professional life. For the most effective plan, it is important to involve the client's estate planner, wealth management professional, financial adviser and legal representation in the conversation. Ask about potential challenges or roadblocks, and request input at each stage. By working as a team, you can create a high-impact plan that reduces the burden on the donor.

4. Select Appropriate Charities

Once you have identified the donation vehicles, choose the individual recipients for each gift. Vet each organization on your list, and find out what percentage of each donation makes a direct impact. Determine what giving vehicles are appropriate for each organization, and match the needs to your client's assets. The charitable plan should cover the current year's giving strategy and sketch out the potential plan for the upcoming three to five years. Build in room for flexibility so that the plan can be adapted to suit economic shifts and changes to the client's status.

Depending on the client's status, the process of making a charitable plan can be simple or complex for accounting professionals. By working with the client and developing a clear understanding of his motivations and financial position, you can create a plan that maximizes the benefits for everyone involved.

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