Jayson Forrest is the managing editor of Money & Life Magazine.
Amanda Sartor CFP® believes the best way to help others give, is to give yourself. She talks about the new philanthropic service offering she is overseeing at Elston.
It says a lot about a company and its approach to charitable giving when it appoints its own dedicated manager to oversee its philanthropic service offering. But that’s exactly what Brisbane-based Elston did last year, when it appointed Amanda Sartor CFP® to head up the business’ new specialist service in philanthropy.
Amanda’s breadth of experience as a CFP® practitioner, coupled with her qualifications in philanthropy, as well as her current Masters in Philanthropy studies at Swinburne University, shows this is no lightweight appointment, demonstrating just how serious Elston is about its philanthropic offering.
“I’ve always been passionate about growing ‘giving’ in Australia, and this new role as Philanthropic Services Manager at Elston, allows me to help advisers support individuals, families and companies to get the most from their charitable giving,” Amanda says.
It’s a belief that she lives everyday, saying the best way to help others give, is to give yourself. And Amanda does this in spades, involved in several voluntary and philanthropic initiatives, including a committee member of the Women & Change giving circle, 10×10 Philanthropy and former director of the Brisbane Women’s Club. You can also add to that list her work as a consultant for Philanthropy Australia.
But with $2 billion in assets under management, why would Elston, as a fully integrated and privately owned wealth management and advice business, branch into philanthropy?
“It’s an interesting question,” says Amanda. “There were two key reasons why Elston decided to offer this service – client demand and business best practice.
“As the average net wealth of our clients increase, their priorities have shifted from wealth accumulation and protection, to finding purpose for their wealth and effectively transferring it to the next generation.”
According to Amanda, these changed priorities have provided the business with the opportunity to use philanthropy as a way for its clients to create a meaningful legacy by engaging with and giving back to their community.
“And from a multi-generational wealth perspective, we’re using philanthropy as a forum for clients to engage with their kids about what their social values are, thereby creating an opportunity for this next generation to get involved in the concept of gift-giving. By doing so, we’re encouraging good stewardship in our clients’ children by getting them involved in a limited capacity, potentially with trustee responsibilities of a foundation, to build up their philanthropic skills over time.”
Elston also views philanthropy as industry best practice, with a vision to be the most trusted and respected financial services firm for its clients, staff and the community it operates in.
Amanda is particularly proud of the willingness of the Elston team, across its eight offices, to participate in a range of employee-driven activities, where team members often volunteer their time on various charity boards or fundraisers with community organisations and programs.
Adding value through charitable giving
Although Elston has only been offering its philanthropy service to clients for just over six months, Amanda concedes a lot of work and due diligence went into building its service offering.
“Naturally, there is a lot of planning, testing and client feedback involved in setting up a new integrated service,” she says. “There was a lot of upfront investment with getting this service offering off the ground and running. This included building new documented processes, investing in new marketing material, and all the business development around that.”
However, throughout the entire implementation phase, Amanda adds it was critical to engage with and upskill the firm’s planners about what philanthropy is. This included explaining the various giving structures that clients can set up and donate through, as well as showing planners how to engage with clients about philanthropy.
Amanda also impresses the importance of having strong advocates to share their philanthropic stories with other planners, by demonstrating the value philanthropy can provide to clients.
“Advocates within a business can be very powerful. They ensure that service offerings, like charitable giving, stays front-of-mind, by showing other planners how philanthropy is adding value to what they’re doing, and not just with existing clients but by attracting new clients as well.”
And advocacy is not just planner driven. Elston has made good use of showcasing client stories, including a podcast, in which a client talks about how her philanthropic dream became a reality. As Amanda says: “There’s nothing better than real-life stories.”
Sharing the journey
Although it’s still early days for the business, Amanda credits much of the success of Elston’s philanthropy service to the team’s support and take up of the offering.
“It’s always been about bringing everybody at Elston along on this journey of giving,” she says. “Because philanthropy is a very personal topic for most clients, as a business, the more we encourage our team to get involved in charitable opportunities, it has heightened that awareness and comfort around having natural conversations around philanthropy with clients, and that’s been terrific.”
In fact, Amanda believes philanthropy is the ideal opportunity for planners to better engage with clients, by allowing them to broaden their conversations with clients about causes that are close to their hearts. She says if giving back to the community or creating a philanthropic legacy is important for clients, then having this type of conversation is an ideal way to build deeper relationships with them.
“It’s the type of engagement that goes a long way in encouraging client advocacy and referrals,” she says. “Having these types of conversations really set planners apart, particularly in relation to establishing trust and confidence in the client-planner relationship.”
A three-pronged approach
Amanda says the business is currently using a three-pronged approach to engage with clients about philanthropy, which includes:
as part of the general financial planning process;
tax minimisation; and
inheritance and intergenerational wealth transfer discussions.
Firstly, Elston is incorporating the topic of philanthropy in everyday discussions and strategies that planners are having with their clients, including estate planning.
“We’re trying to better understand what type of legacy a client wants to leave. And if they don’t have beneficiaries, then it becomes relevant around whether the client wants to leave a charitable legacy.”
Secondly, discussions about philanthropy become quite critical in relation to tax strategies that planners are having with their clients, particularly if they have a significant tax event, like selling a property or the sale of a business.
“If clients have the capacity to donate, we can use philanthropy as a means of minimising their tax, while enabling them to control where 100 per cent of their donation is spent.”
The third prong of Elston’s approach is having conversations with clients around their inheritance and how their children will inherit the family business or family wealth. Importantly, this type of conversation is about preparing the client’s children though financial education and aligning them to the philanthropic values of their parents.
A choice of vehicles
Typically, when a client is referred to Elston’s philanthropic service, the type of structure planners are most often called upon to establish is a Private Ancillary Fund (PAF). This type of structure provides clients with more control over their donations and enables them to act as trustees of their own charitable trust. But Amanda concedes this structure does require a lot of ongoing governance and compliance that needs to be properly managed.
“By supporting our clients with their PAF, they feel confident that everything is run compliantly, allowing them to focus on where they gift their money each year and in what ways they can involve their family in that process.”
Unlike a PAF that requires about a minimum of $500,000 in funds to operate, Elston is beginning to have conversations with clients around setting up charitable sub-funds, which can be set up for as little as $50,000. This type of structure offers a much lower cost of entry and lower complexity for clients who want a perpetual giving vehicle.
“Essentially, a charitable sub-fund is similar to a retail super fund in that you have an account within an existing structure, but you are outsourcing all the reporting, compliance and regulation to another trustee. A charitable sub-fund supports giving from a much more accessible level,” Amanda says.
“However, clients can set up either type of structure, donate into them and enjoy the same tax advantages.”
Regardless of which type of structure clients choose, Amanda says it’s important to help clients articulate their vision for giving, which includes identifying what they are passionate about and what impact they ultimately want to make with their money.
It’s an approach that is working for Elston, with clients overwhelmingly responsive to the new service offering, keen to learn more about using philanthropy to create their own legacy.
“We have a number of existing clients with PAFs and they are appreciative having a dedicated specialist in-house to support them in running the structure and to assist with their grant making,” she says.
“We’re also having a lot of engagement with clients from a charitable legacy perspective, so when we’re having estate planning conversations, we’re able to better educate them around setting up trusts or bequests through their will. And as part of the process, we also work with their lawyer.”
Consider a specialist
Amanda emphasises that offering a philanthropy service is a huge undertaking for any business and not something for the faint-hearted. So, does this mean you need scale to do it successfully?
“Probably yes,” she says. “In terms of providing a formal philanthropy service, like we’ve done at Elston, and particularly in helping clients manage a PAF and their grant making, this does require a lot more resources, specialist knowledge and skills.
“And there are also a lot of nuances in the regulation of PAFs to consider, as well as the constant changes happening in the not-for-profit and philanthropic sectors to be aware of.”
Amanda’s advice then?
“First and foremost, a planning business needs to ask: ‘What is our objective in offering a philanthropic service?’. If the answer is about adding value to their client relationship or differentiating themselves in the market, I’d question whether they need to provide this service internally or whether they can utilise an external specialist?
“Without the scale or resources to roll out your own philanthropy service, I would recommend a planner engage a philanthropic specialist to support them and their clients to get the best outcome.”
She emphasises that engaging a philanthropic specialist is not about outsourcing this part of the client-planner relationship. Instead, it’s about bringing in a specialist to assist the planner deliver the best client experience possible.
But what if planners are keen to formalise a service offering within their business?
“Then I would recommend they first research the various philanthropic structures and speak to other financial planning firms that have their own internal capability. This will help them to understand what is involved.”
With the Elston philanthropy service now operating for six months, what were some of the key learnings from rolling out the offering? For Amanda, the biggest learning was the importance of bringing staff and clients along the journey towards implementation.
“We have over 40 planners situated in different locations across the eastern seaboard. So, bringing in any new change for a business can take planners a little while to get onboard with,” she says. “For me, this was really about shifting how I work with planners and their teams, to help them shape and leverage the service to provide value to their clients. This involved tailoring my approach for each planner, which included taking the time to fully understand what their business needs were and the needs of their clients.”
Very early on during the implementation phase, Amanda recognised the importance of “putting everything on a platter” for the advice team, so it was easier for them to understand and introduce the charitable giving service to clients. This involved Amanda creating standardised templates and resources, which planners were easily able to use in client meetings.
“I’m constantly reviewing these templates and resources based on planner feedback,” she says. “This is allowing me to tailor these resources in a way that makes our planners feel more comfortable and better suits their approach to discussing philanthropy with their clients.”
And finally, Amanda recommends any planner wanting to offer advice on charitable giving to upskill.
“There are some great postgraduate courses on philanthropy that will help planners to better understand the various aspects of this sector, like regulation and compliance.
“And if in doubt, contact Philanthropy Australia. It has a range of resources, information and contacts to help you decide if a philanthropic service is right for you and your business.”
4 ways to donate
Whether clients want to support their local community, honour a loved one or make a lasting impact, there are many ways they can support a charity or cause close to their heart. Here are some:
Donating directly to a charity is the most common way to give. This can be through writing a cheque or participating in a fundraising event, such as the Future2 Wheel Classic or Hiking Challenge. Giving directly to charities works best when clients know and trust the organisation and also know what impact their donation is having. If tax effectiveness is not a priority, they can support any charity or cause they choose.
Open a charitable sub-fund
Many individuals and companies aren’t aware they can establish their own perpetual charitable fund with as little as $50,000*.
Opening a sub-fund gives clients the ability to make a donation now and then disburse funds to charities over time. This provides an effective donation vehicle for those with significant tax events or higher taxable incomes in the current year but not necessarily going forward. They can name their sub-fund after their family or loved one and decide who to donate to each year.
This option is great for those who want to create an enduring legacy but are happy to outsource the administration, management and investment decisions.
Establish a Private Ancillary Fund (PAF)
Commonly referred to as a Private or Family Foundation, a PAF is a philanthropic trust structure that helps clients take a more planned approach to their giving and is recommended where their donated funds are $500,000* or more.
This vehicle is generally suitable if clients would like full control and are comfortable to take on the trustee responsibilities. It also provides a perfect opportunity to engage and involve the wider family in grant making. The ability to invest their donated funds in this way delivers a significant opportunity to magnify their donations over time.
Create a charitable Testamentary Trust
If the idea of leaving an enduring legacy appeals to clients but they don’t have the available funds to give to charity now, setting up a charitable Testamentary Trust or leaving a charitable bequest through their will could be an alternative. This option provides clients with the ability to create a foundation in their family name, or for a cause that lives on for many years in the future.
* Amounts quoted are based on industry recommendations and what is usually available in the market.