In past posts, we’ve talked about how employers can benefit from building Modern Giving programs, as well as the many benefits to individuals and even charities. But you might be wondering why financial institutions would want to create a product that gives money away. The reality is that this isn’t a new idea, but it is a response to a growing demand from clients.
In 2012, the Financial Times reported on the growing trend of banks expanding philanthropy offices to offer their clients advice about how to give. Even as the global economy struggled to pull itself out of recession, the world’s wealthy continued and even increased their philanthropic efforts. But with the growing interconnectedness provided by the internet, smartphones, and social media came a wider awareness of causes in need of financial support. To help them make smart decisions about their charitable giving, wealthy clients turned to the same institutions that advised them on how to manage their overall wealth. But aside from client demand, what drove the rise of the philanthropic wealth adviser? In short, it was good for the banks too.
By advising clients on how to manage their charitable giving, banks realized that they could build stronger, longer-lasting relationships with their clients. Over time, that close relationship leads to more business for the bank, both with the individual who received the initial advice, and those around them. A 2016 article for Alliance Magazine noted that many banks that offer these services have worked with entire families to strategize their philanthropic giving.
Of course, you might be thinking that banks only benefit from offering charitable giving products to the wealthy. But as banks look to the future, they are beginning to tailor offerings to meet the needs of younger clients who have less wealth built-up but want to manage it wisely. Many firms now offer low-cost, easy-to-navigate investment solutions and gamified planning tools to build towards retirement. And because millennials are known for being cause-driven consumers, the next wave of financial offerings include solutions that simplify charitable giving.
Many credit card companies like American Express, Citi, and Discover have already jumped on board by making it easy for clients to donate unused rewards points and airline miles. Companies like TOMS, Warby Parker, Smile and Bombas have built their entire business models on giving back. Even Facebook has jumped on the demand to make giving easier with their Fundraisers tool. Banks that add more robust charitable giving services to their offerings will be able to differentiate themselves from the competition and tell a compelling story about their brand that will foster stronger relationships with clients who can be fiercely loyal to brands they believe in.