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Women and Philanthropy

Are you asking your female clients the right questions? Discussions about philanthropy may deepen your professional relationship. Find out how.

March 20, 2008
by Community Foundations

A Merrill Lynch Investment Managers survey revealed that high-net-worth (HNW) women are younger than their male counterparts. Sixty-one percent of the women surveyed were between 45 and 55 compared to a general HNW population in its 60s. That spells more opportunities for advisors and a greater chance of bringing the next generation on board, as women confront their children's financial training, college education, care of an elderly parent, retirement and estate planning.

Experts say that HNW women, aside from their enormous wealth, make ideal, albeit persistent, clients. "Women want to understand every angle, research on their own and above all, ask questions," says Kathleen Miller, MBA, CFP and president of Kirkland, Wash.-based Miller Advisors, Inc. But a patient advisor who enjoys educating and informing clients will find that women are extremely decisive once they have all the facts.

Women's Entrepreneurship Increases

One of the driving forces behind women's newfound financial power — and philanthropic mindset — is entrepreneurship. Nearly half of all privately-held firms have a female owner or co-owner.

Contrary to popular belief, women business owners are more willing than the general population to take risks in securing financing and making investments. "These women are entering the economic mainstream and serving as role models for all women who want to grow their businesses," said Myra M. Hart, director of the Center for Women's Business Research and retired professor at Harvard Business School.

While both women and men business owners surpass the general population in their level of philanthropic involvement, both in terms of money donated and time volunteered, women are more likely to serve in leadership positions within charitable organizations, such as sitting on boards or raising funds, according to a survey conducted by the Washington, D.C.-based National Foundation for Women Business Owners. And half of the women with assets of $1 million or more contribute at least $10,000 annually to charity. By contrast, only 40 percent of men with assets exceeding $1 million contribute at least $10,000 to charity.

"Women seem increasingly drawn to nontraditional charities, whether financial training for girls or raising scholarships for women in need," Miller says. "Powerful women are fully aware that they can leverage their philanthropy by serving as role models and mentors for other aspiring businesswomen who may be less fortunate."

The Role of Community Foundations

Indeed, both women and men are increasingly earmarking donations specifically to women's funds at community foundations. Backed by numerous studies, the assumption behind such funds is that women and girls benefit more from same-sex versus universal programs. Only five to seven percent of overall community foundation funds have been earmarked for girls and women, says Simone Joyaux, founder of the Women's Fund of Rhode Island at the Rhode Island Foundation.

The Women's Fund of Rhode Island considers itself a progressive social fund, but she notes that donors are able to make "restricted" grants and that several women have asked that their money not be used in support of reproductive rights, but instead economic parity for women or financial training of girls.

While the Rhode Island Foundation ultimately approves the final grants, the Women's Fund functions as "field-of-interest fund" with its own advisory council and fundraising capabilities. A recent action typical of the Fund's commitment to systemic change was a grant to the YWCA of Northern Rhode Island to run a political campaign-training program for women. "Women have traditionally not had a political voice and the goal of the program was to teach women how to run a campaign or run for political office," Joyaux says.

The fund is unique in that the Rhode Island Foundation awarded it a $2.5 million endowment and a dedicated staff person when Joyaux approached them three years ago. "Community Foundations know that women's funds are a wonderful way to reach out to women and that's important for their survival," Joyaux says. "Women are making more of the giving decisions, plus they outlive men." The movement for women's rights is an old one, but is resurging all over the world. Joyaux suggests visiting the Women's Funding Network, an international organization with over 100 member funds that are committed to improving the status of women and girls globally and locally.

Broaching Philanthropy With Clients

Despite women's obvious interest in philanthropy, many advisors hesitate to broach the subject. Understanding how women think can help you overcome this hurdle.

"Philanthropy is very personal so I never ask clients direct questions about their charitable intent, but integrate it into the entire planning process," says Susan K. Bradley, CFP, founder of Palm Beach Gardens, Fla.-based Women, Meaning and Money. "As early as the first meeting, you can begin to ask open-ended questions such as: What do you consider your purpose and meaning in life? What's important to you now? What are you most concerned about?" Such questions should be routine in financial planning, which is, after all, about fulfilling goals and dreams.

One of the best ways to connect with your female clientele and jumpstart a discussion on philanthropy is to ask about their family's sense of community. Indeed, women business owners are more likely than men entrepreneurs to say that their interest in philanthropy was prompted by family tradition or parental example (23% of women vs. 14% of men), according to the National Foundation for Women Business Owners. A sense of family legacy can provide motivation and purpose in selecting a cause.

Another way to connect with your client is to attend one of their charitable events. Clients appreciate your sense of caring and involvement in their lives. Following your client's lead in supporting their charitable choices is one thing, but an advisor should never push his or her own philanthropic agenda.

"The real benefit of philanthropy is service and a sense of connection with your community and that is something you can share with your client," Bradley says. "That feeling of service has nothing to do with tax deductions."

Philanthropy, precisely because it is so personal, is one of the deepest ways for financial advisors to connect and build relationships with their clients. Financial planning is about helping clients attain their dreams and philanthropy may be the noblest of these.

To contact your local community foundation or to learn more, log on to www.communityfoundations.net.

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Copyright © 2008, Council on Foundations. Used with permission.