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For high-net-worth Canadian families, wealth planning involves more than ensuring there’s enough money for retirement expenses and providing financial support for children and grandchildren.
“The best wealth advice also helps families explore and understand their values regarding giving back,” says Timothy Stranks, a wealth advisor and client relationship manager who specializes in philanthropic planning at Nicola Wealth in Vancouver.
Not only can this support communities and aid global issues, it can also bring different generations together around a common cause, he explains. This can strengthen a family bond, and promote a deep sense of philanthropy.
Even among families frequently supporting charities, few have a long-term philanthropic strategy, one that aligns with the other aspects of their financial planning and might help them give even more, Mr. Stranks says.
“When first meeting with clients, if we ask, ‘Have you considered strategic philanthropy?’ many aren’t sure exactly what that involves. But once we start discussing the topic and the impact they can have, they quickly recognize the opportunity for the family to make a difference in a way that is meaningful to them.”
He adds it’s all about increasing the impact of their generosity, and providing the next generations with learning opportunities that solidify a legacy of giving.
Mr. Stranks says many clients have a strong desire to give back, be it driving immediate beneficial impacts or investing in charities that support systematic change by addressing the roots of social or environmental problems. They just need support in crafting the right plan to maximize their giving.
The best philanthropic goals are built into a broader comprehensive wealth plan, says Mr. Stranks, addressing retirement, tax efficiency, estate and family support goals and, in many cases, business succession.
“At Nicola Wealth, our advisory teams build detailed, all-encompassing wealth road maps,” he says. “They show how much money clients have, how it can be invested and how various planning strategies can help them achieve their goals, versus simply checking the box to make sure they have enough. Only then do giving strategies become clearer. You can quantify the benefits of taking one approach over another.”
Developing a philanthropic philosophy that’s tailored to individual families also requires exploring the meaning behind money and their goals to see it help others. There are many ways for people to make a difference, whether confidently giving while they’re living, or leaving a percentage of assets to charities in their will.
“Meaningful philanthropic experiences often occur when clients feel connected to the causes they support,” says Teresa Virani, executive director of philanthropy at Nicola Wealth in Vancouver.
Her team at Nicola Wealth helps clients delineate their philanthropic goals. Even if they already have a sense of what they care about, and they understand that philanthropy offers tax efficiency, many are unsure how to devise a sustainable giving plan with maximum impact.
“It’s more of a question of ‘How or where can you have the most impact?’” Ms. Virani notes.
With careful planning, philanthropic dollars can reach charities in a way that supports them to achieve their intended impact, and is aligned with the donor’s values. It’s also among the best opportunities for family members to have wealth discussions in a positive way, she says.
“Philanthropic planning is an amazing way for families to build stronger bonds around common values, talking about charities they would like to support and how they want to go about it.”
At Nicola Wealth, clients have the benefit of a firm with deep knowledge in giving, and a long-standing commitment to philanthropy.
“When John Nicola started the firm in 1994, he was very clear on wanting to create a culture of giving back to the community,” Mr. Stranks says.
That led to the creation of Nicola Wealth Gives Back, the firm’s charity committee that drives a sustainable flow of support. A percentage of the firm’s annual profits go to charities that resonate with the staff.
“We have ongoing relationships with many vetted charities, supporting different causes through the committee. So we’ve done a great deal of research that clients can leverage to help with their own giving strategy,” says Mr. Stranks.
He also sits on the board of the Nicola Wealth Private Giving Foundation, a donor-advised fund that can efficiently mobilize disbursements to charities. It’s offered to clients at no additional cost, for a strategic and hassle-free method of giving.
Establishing a donor-advised fund requires a minimum donation of $25,000. The foundation enables clients to streamline charitable giving. This way, they can align their philanthropic wishes with their financial and tax planning strategy, for a tax-effective means to develop a sustainable and more strategic giving plan.
Some clients choose to give a large, one-time lump sum. Others distribute income to a variety of charities over time, for example gifting ongoing investment returns generated from the fund’s managed investment portfolio.
By comparison, families launching their own, private foundation have a large up-front legal burden. They’re also required to do regular, public reporting that reveals how much they donate and how much capital is in the foundation. An option like Nicola Wealth’s Private Giving Foundation is a simpler alternative, affords more privacy (with the option of anonymity) and offers flexibility when it comes to giving.
A strategic plan supported by a donor-advised fund such as this has another key benefit – one that can’t be easily measured in dollars and cents, he says.
“For parents looking to instill family values of giving, it’s a good way to impart the notion that they are fortunate to be in the position to give back and, as a result, have a responsibility to use it to do good in the community and the world at large.”
Nicola Wealth Management Ltd. (Nicola Wealth) is registered as a Portfolio Manager, Exempt Market Dealer and Investment Fund Manager with the required securities commissions. All investments contain risk and may gain or lose value. Please speak to your Nicola Wealth advisor for advice based on your unique circumstances.
