When and How to Give
26th February 2024
Stewart Sanderson is an experienced leader and adviser within the UK Wealth Management sector. Stewart joined our board of trustees in November 2023, but he has been involved with ECF since 2010 when he was working for Coutts & Co and was based in Chelmsford.
Stewart is experienced in talking to clients about their wealth, planning and, where appropriate, discussing how they can give to charity during their lifetime or leave a lasting legacy to support causes that matter to them.
We asked him how he brings the subject of giving to charity into his conversations with clients, and he was pleased to share his thoughts with us below:
For us to manage wealth properly, it’s vital that we acknowledge that everyone is different and will have differing views on the question of “what actually is wealth?”.
We can debate for hours without agreement or consensus. Why? Well, for many people, it is not about money; it’s about motives, circumstances, and beliefs. These will be key drivers when looking deeper.
It’s a privilege to talk to people about their wealth, because while there are some fundamental questions about what they might have, what they want to do, and when, much of the interest is about the emotional side of their lives, not the money. I say that, as people care much more about family, about health, about being connected, seeing friends, having fun, and living, than they often do about financial risk, asset allocation or performance data.
Feelings matter, they are personal and it is why, when the planning is done, cashflows and plans built, there is a need to discuss what you need (mandatory – bills, the cost to survive), what you would like to do (discretionary – fun, the cost to live!) and increasingly, what do you want to be remembered for (legacy – gifting – leaving behind).
What do you want to be remembered for?
For many clients, business owners, or retirees, it is years, not money, that they will run out of first. This is a harsh reality, but as they discuss their future, such a revelation shifts the focus to “what do you want to be remembered for?”. In my experience, people are becoming more and more aware of the inequality of life, and with recent reminders such as Covid19 and the cost-of-living crisis impacting local communities, it has been brought to the fore. They realise they can help.
This is where advice, be it legal, tax, financial, investment or simply shared experiences can highlight the importance of donating to good causes. Helping others in your lifetime allows you to become “wealthier”, not in pounds and pence, but with fulfilment, satisfaction, and purpose, as you observe how your money can make an impact on the lives of so many.
We all do this already in a small way; most of us will sponsor somebody doing a marathon, have a regular donation to a charity they care for, attend or volunteer at local events, but this can be so much more and for those with savings accumulated over time, or proceeds from a corporate event or business sale, the UK government offers several tax breaks.
Why wait to give on your passing?
Donate now! It is removed from Inheritance Tax (charged at 40%) which itself can, with basic planning, be reduced to 36% in your lifetime or through legacies in your will. Charities are eligible for Gift Aid; this increases your donation and allows them to ordinarily claim an extra 25p for every £1 that you give. For higher rate taxpayers there’s more, as you can claim back the difference between the tax you’ve paid on the donation and what the charity got back. It’s not the deciding factor, but it is very efficient.
This article is not about tax planning, but there are several allowances that make the concept of giving away wealth to charity more and more compelling. For example, that could be saving Capital Gains Tax, or donating assets that are of value, but not in liquid form e.g. land, property.
So, how do you choose who to support?
With over 150,000 registered charities in the UK alone, and so many deserving causes, it can be a minefield. But why take on that burden? Organisations like Essex Community Foundation exist to support local people, assist local charities, and make a difference in their community. They remove the administration and governance worries, giving donors time to engage with local causes, learn about issues and, if they wish, retain anonymity. Why not work alongside professionals to help you deliver your charitable wishes?
The role of an adviser is, in part, to help you understand the power of the possible. Knowing you have a plan to provide what you need, (plus what you want); it means time and effort can be diverted to the more interesting topics. Avoid endless reviews of data, performance, risk and reward, but spend the time focused on things that really interest you. Many of us have a passion to make a difference and support our community; some through offering time, some their expertise and for others, they can use money. This is why there is a real rise in philanthropy and giving while living, as younger donors and fund holders share lived experiences of doing this, increasing their personal wealth as they see and feel first-hand the impact it has on the lives of others.
Wealth advisers should always speak to their clients about charitable giving. Many clients are already charitably minded and set up foundations or are involved in charities during their lifetime while others, once they have understood the benefits of charitable giving and related tax benefits, can be encouraged to donate when otherwise they might not. As wealth within families is passed through generations, more and more want to be ethical and responsible. Thinking beyond the numbers only adds to what it means to be wealthy.
Talk to your adviser and make a lasting difference
Charitable giving is undoubtedly an opportunity for you and your adviser to interact on a much more personal level, allowing you to prioritise and implement your objectives. You have enough, the plan shows that; this is about enriching the remaining wealth to mitigate tax, create legacies, educate future generations, and make a lasting difference to others.
Experience suggests achieving philanthropic goals will only add to your personal wealth.
You can find out more on our website about setting up a charitable fund, leaving a legacy or simply just leaving a lasting gift to your community. Alternatively, please call Perry Norton, Head of Development, on 01245 355947 to have a conversation.