Tax time isn’t the only time to give, says microfinance provider


As the end of the financial year approaches, many of us are looking more closely than usual at our financial affairs, including tax deductible charitable donations. 

But rather than focusing solely on one-off gifts, how many of us are thinking about aligning our personal values with our financial goals through structured philanthropy?

This is the question that preoccupies Kevin Bailey, financial planner, Head of Philanthropic Services at Shadforth Financial Group and member of the Council of microfinance organisation, Opportunity International Australia.
“Because donations are tax advantaged, tax time is certainly a good time to consider giving, and of course every contribution helps,” he said. “Nonetheless, I would really like to see the question of structured philanthropy top of mind and on the agenda more regularly for financial planners and their clients.”

Mr Bailey cited the fact that only 7.5% of Australians include charities in their wills[1], and the 2012 Opportunity Donor Survey which revealed that only 2.1% of respondents have a financial planner that offers financial advice around philanthropy.

“It is my belief that as the financial planning profession evolves so too should planners’ knowledge about how to help clients translate their values into financial decisions,” he said.

Mr Bailey then pointed to two of the world’s wealthiest philanthropists, Bill Gates and Warren Buffet, as examples of successful people for whom philanthropy is a central theme in their life.

“They are shining examples of the truth that with power comes responsibility and that financial success brings with it the moral imperative to make a difference for the better in the world,” he explained.

“It doesn’t matter whether you are interested in contributing to your immediate community or supporting a specific charitable organisation, our experience has been that clients who become involved in something beyond their own financial success, who move from success to significance if you like, have more meaningful lives.”

Mr Bailey went on to say that conventional thinking has always been that there are four stages in a financial plan. The first is investment advice, based on a knowledge of capital markets, and an understanding of a client’s financial goals.

The second stage usually involves taxation planning, and the consideration of trusts and other structures to help improve returns. Stage three centres on retirement planning, how much you are likely to need and how best to achieve that, and the fourth has traditionally been estate planning, looking at what you do with your assets when you die.

“I would really like to see philanthropic giving become the fifth and equally important step in the financial planning process,” Mr Bailey explained. 

“With a large portion of the wealth in Australia classified as first generation, the trend has been for individuals to pass all their wealth and assets onto their children, but there are so many effective ways to contribute to charity, for example through private or public ancillary trusts, without neglecting your children.”

“And empowering your children by teaching them about financial planning and charitable giving rather than simply gifting them with money is rewarding for both parties,” he explained.

Mr Bailey concluded by saying that philanthropic giving should not be seen as something that only wealthy people can do. 

“Every one of us has three things to offer,” he said.

“Our time, our talent, and our treasure. Even if you don’t have treasure to offer, you do have talent and time. And these all-important gifts can make every bit as much of a difference as money. To you as well as to those you help.”

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