By Todd Cohen
CHARLOTTE, N.C. — The ranks of wealthy individuals are growing, and they increasingly are looking for advice on how to make charitable investments — creating a market that Bank of America aims to serve.
“Charitable giving is just another way we advise our clients to meet their financial, family and community goals,” says Tom Fruge, market executive for Charlotte and Western Carolinas for Bank of America’s Private Bank. “That will become increasingly important as we grow our business and as new generations of families inherit and build their wealth.”
With $18.5 billion in charitable assets under management, Bank of America is one of the biggest players in the charitable-services market.
And that market has become highly competitive, with at least $6 trillion expected to go to charity over the next 50 years as a result of wealth transferred between generations, according to conservative estimates by Boston College researchers.
Bank of America handles charitable services as one of several areas of expertise for which its “relationship managers” – who work directly with wealthy clients — can turn to specialists, known as “wealth strategists.”
A wealthy client – typically with at least $1 million in assets to invest – initially would work with a relationship manager, who then might involve a wealth strategist to help address specialized needs and complex solutions, including structuring charitable gifts and funds.
The bank, which often turns to community foundations for their expertise on local needs and issues, also works closely with a client’s own advisers in developing a charitable plan.
Two years ago, for example, a Bank of America relationship manager asked John Goldsbury, Southeast regional director of the bank’s wealth management consulting group, to meet with her and an established client – a wealthy woman in her 80s who made many large gifts to charity every year.
The client was donating more money each year than the law permitted her to deduct on her income tax, and also wanted to make gifts to her children so she could limit the estate and gift taxes her estate would pay when she died.
After the meeting, Goldsbury suggested to the relationship manager that the client could address both issues by creating a “charitable lead trust,” which makes annual payments to charity for a set number of years, after which the trust assets go the donor’s children.
That solution would let the donor continue making large gifts to charity, take greater deductions each year, minimize her estate and gift taxes and transfer wealth to her children.
Goldsbury then talked several times with the client’s accountant before meeting with the accountant, relationship manager and client, who created a trust with $2 million to $3 million in assets.
“We don’t have an agenda that’s going to make us push charitable giving,” Goldsbury says. “We’re going to listen and see if charitable giving fits into your goals.”