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Legacy Matters

December 13, 2018

‘Tis the Season for Evaluating Charitable Giving

At this time of year, our thoughts are focused on finding holiday gifts for family and attending holiday events. However, it is also the time of year for making charitable gifts and considering the organizations you wish to support. If you have already made your decisions about year-end charitable gifts, the end of the year is also a great time to evaluate your charitable giving strategy (or note the lack thereof) and start planning for next year.
 
For most high net worth (HNW) families, charitable giving is a core pillar of their value system. Philanthropy, as part of the family’s legacy, is passed from generation to generation with each generation supporting causes they care about.
 
According to the Giving USA Foundation, Americans’ generosity reached a record $410.02 billion in 2017, with 90% of high net worth families giving to charities and 48% of these families also volunteering their time to charitable organizations.1
 
However, a recent study showed that while donations are up and donors have confidence in the abilities of nonprofit organizations to address social and global issues, many HNW donors lack a charitable giving strategy and the necessary knowledge to understand whether their giving is making an impact on the issues they care about.2
 
Being strategic about charitable giving will help ensure that your giving has the desired impact. Your estate planning attorney and financial advisors can partner with you to design a giving strategy that meets your needs, and they can help implement your plan to achieve your philanthropic objectives in the most tax-efficient manner.
 
Some things to consider when creating your strategy:
 
  • Do you have a family mission statement to guide the family’s philanthropy over the years?
  • What issues are your family members most passionate about?
  • Do you want to give smaller grants/donations to multiple organizations or larger “impact” grants to a select few organizations?
  • Do you want to make charitable gifts during your lifetime (“giving while living” is how one client recently described this) or upon your death?
  • Do you want to take an active role beyond making gifts or grants to the organizations you are supporting?
  • Do you know how the organizations you support operate and how they measure success/impact?
  • Would you like to involve multiple generations of your family in a meaningful way? Have you prepared them to participate and do they understand the foundational tools and strategy of the family’s philanthropy?
  • Do you have tax or financial goals you are trying to achieve with your philanthropy?
  • Would your goals be achieved more efficiently or most effectively using charitable lead trusts, charitable remainder trusts, donor advised funds or a private foundation? Have you recently reviewed the terms and administration of existing trusts, funds and foundations, and are they aligned with your charitable wishes as currently defined?
 
According to a recent study of HNW donors, making an impact through giving does matter, and the majority of donors are planning to continue or increase their giving levels despite recent tax law changes. For families without a giving strategy, creating one can improve their philanthropic impact by ensuring the resources go to the nonprofit groups that are providing the best solutions to the problems each family cares about.  
 
Warner can help you design a giving strategy to include a family mission statement, charitable trusts, donor advised funds or a private foundation that will meet your social impact and tax goals. Please contact your Warner attorney or Mark Harder, chair of the Private Client and Family Office Group, at 616-396-3225 or mharder@wnj.com.
 
1Giving USA 2018: The Annual Report on Philanthropy for the Year 2017, a publication of Giving USA Foundation, 2018, researched and written by the Indiana University Lilly Family School of Philanthropy. https://givingusa.org/tag/giving-usa-2018/
 
22018 U.S. Trust Study of High Net Worth Philanthropy, published in partnership with the Indiana University Lilly Family School of Philanthropy. https://www.ustrust.com/articles/2018-us-trust-study-of-high-net-worth-philanthropy.html

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