The wealthy donate to charities for reasons that escape even their advisors.

Apart from wanting to give back and having an impact on society and the world, the wealthy donate to encourage charitable giving by the next generation, according to a new study from U.S. Trust.

Almost one in three (30%) said they give to charity to encourage giving by their heirs, followed by 23% who were motivated by religious or spiritual reasons. Their advisors, however, mistakenly believed their clients donate to charities for other reasons, with 46% saying their clients contributed to charitable causes to reduce their taxes.  In fact, only 10% of high-net-worth individuals cited reducing taxes among their motivations for giving, according to the study.

More than three in four advisors (78%) believed their clients would reduce their charitable giving if tax deductions for donations were eliminated, again displaying their lack of insight into their clients. In fact, only 45% of high-net-worth individuals indicated they would reduce their giving if tax deductions were phased out.

If advisors are shy about initiating philanthropic conversations with their clients, they shouldn’t be, the study found. More than one in three (34%) wealthy individuals said the topic should be raised during their first meeting, and virtually all (90%) agreed that the discussion should occur within the first several meetings with their advisor.

To their detriment, advisors tend to hold off on having such conservations with their clients. Many are more likely to bring up the subject once they have a greater knowledge of a client’s personal (40%) or financial goals (47%), or when they are aware that a client volunteers or is active in the community (43%).

Advisors are also passing up an opportunity to connect with the next generation. Nearly half (45%) of wealthy individuals said it is important to involve children and grandchildren in discussions with their advisors about charitable giving.  Only 9%, however, reported that advisors actually do so.

Overall, most advisors (74%) found that discussing philanthropy is good for their business, with 24% saying that it presents a more comprehensive approach to managing a client’s wealth. Others said it shows clients that they are interested in more than just their money (13%) and provides insights that help advisors better serve their clients (13%).

The study surveyed 312 advisors and 119 high-net-worth individuals with $3 million or more in investable asset who are actively engaged in charitable giving. It was conducted in August 2013 by Phoenix Marketing International, an independent market research firm.

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