Charitable Giving

Seeing the Big Picture and Defining Success

I’ve always believed successful financial management was more than crunching numbers, researching the analytics, and applying market principles and applicable tax laws. While there are certainly prerequisites to financial success, the real key to successfully managing your finances is knowing and managing yourself.

Poor financial decisions often the result of not being able to see the big picture, looking at the short field rather than the long horizon, of not having proper perspective. This is certainly true with our personal lives, as well.

Last month, I gained a new perspective on my world when I served with a medical mission team in rural Guatemala. Excited for a new adventure, I agreed to participate without knowing much detail (and without having any medical training or speaking any Spanish). At a pre-trip meeting a few weeks out, we were told not to bring anything that would be upsetting to lose, to pack light, dress down, don’t walk alone or at night, and “try not to look like money.”

Upon arriving, a four-hour drive immersed us into a new reality — heavy air pollution, dilapidated housing, chaotic traffic, loose livestock and an endless stream of people walking on the side of the road all carrying various supplies on their backs, heads and arms.

We set up temporary medical clinics each day in small villages. The typical venue was a rectangular hall in which we strung up rope and tarps to make a couple private exam rooms. We had two doctors, some local translators (Spanish and K’iche’, one of the Mayan languages), and a suitcase pharmacy stocked with basic needs. Guatemalans trust American doctors far more than their own, and for the most part this was their only doctor visit for the year.

One of our team members, a Guatemalan native who immigrated to the United States in the 1970s, helped collect 14 suitcases full of clothing, shoes, hats and toys to distribute. Additionally, we had our 16-year-old “eye doctor” who had collected glasses over the last year and was prepared to test vision and provide a best-effort fit. Both were very popular. Many of the people in these villages do not have running water and electricity, much less these basic daily necessities.

Traditional (Mayan) garb was worn by most women and girls. Boys wore ragged jeans and t-shirts. Most shoes were quite worn, typically with holes. Despite my best efforts, wearing plain gray t-shirts and brown hiking shoes, I still looked like money.

Lots of children hang around unsupervised during and after school. My job on the team soon became keeping the kids out of the way and entertained. Many of them got to throw a Frisbee and (American) football for the first time. We also joined them for soccer, and clearly gave up any competitive advantage.

Our success in life, and how we define it, can often be found by stepping back once in a while and taking in the big picture.

By |2019-08-14T14:00:07-07:00May 27th, 2014|Advisors, Charitable Giving, Company News|

Generosity Requires Due Diligence

People often have well-established and respected charities that are close to their hearts. However, when considering donating to less-familiar charities, donors should be cautious.

CNN recently reported that many charities actually do very little for the causes they purport to assist and that “the 50 worst charities give less than 4 percent of donations raised to direct cash aid.” Vast sums of donated funds go to pay for-profit fund-raising companies and lavish executive salaries and perks, before any cash goes to aid the needy cause. In other words, they basically “raise money to pay themselves.”

Organizations such as Charity Watch and Charity Navigator provide rankings of the best- and worst-rated charities. Charity Navigator has also issued its “Top 10 Practices of Savvy Donors,” which includes “Hang up the phone on for-profit fund raisers.” Another top practice is not falling for the “sound-alike” charities. CNN called the Kids Wish Network “the worst charity in America,” while the similar-sounding Make a Wish Foundation is highly-rated by Charity Navigator. So-called “instant charities” that pop up after a world disaster such as an earthquake should generally be avoided, as well.

America is truly a “nation of givers,” of both cash and time, according to the American Enterprise Institute. A study by social scientist Arthur C. Brooks shows that Americans give well over $300 billion to charity, not including the value of our volunteered time. During the past 50 years, while GDP has risen about 150 percent, charity has risen about 190 percent. So, while Americans have grown richer, charitable giving has grown even more.

Our advice to the generous client: In addition to getting solid financial, tax and legal advice with one’s charitable plan, don’t forget the due diligence on the charity itself.

By |2019-08-14T14:00:11-07:00August 27th, 2013|Charitable Giving, Estate Planning|

Make Giving Back Part of Your Financial Plan

Our reasons for giving to charity are as individual as we are. Many contribute out of a desire to give something back to communities or organizations that have helped them in the past, such as an alma mater, a youth organization or a hospice. Some give because of personally held values, principles or religious convictions. Others hope to create a legacy that will last long into the future.

Whatever their reasons, Americans give generously, even in challenging economic times. Charitable giving statistics reported by the National Philanthropic Trust show that 65 percent of U.S. households give to charity. Americans gave $298.3 billion in 2011, a nearly 4 percent increase from 2010.

Although many families and individuals give generously, the vast majority doesn’t give in a planned way. Most employ a charitable-giving strategy once referred to as checkbook philanthropy and which could now be called click-and-give philanthropy with the evolution of social media and the ease of online contributions. This really isn’t a strategy, but rather the unplanned giving of small amounts to a variety of charities, commonly in cash and often in reaction to solicitations with the best pitches.

Nearly every day new opportunities to donate money are presented to us via email, Facebook and other online venues for everything from celebrity Kickstarter projects to friends participating in walk-a-thons. There are many worthy causes, and it is wise to earmark a certain amount of funds annually to support the efforts of your friends and families raising money for causes that are important to them, as well as for  disaster relief and other needs, as they arise.

Yet, those who also plan their charitable giving enjoy many tangible benefits, in addition to the satisfaction of assisting the charity of their choice. Planned giving is an organized approach that evaluates your personal values, selects charitable organizations and gift-giving vehicles that best reflect those values, and maximizes the financial and tax benefits of the gifts.

According to the authors of Giving: Philanthropy for Everyone (Quantum Press), making planned charitable gifts during your lifetime can increase the value of your estate to pass to your heirs, can convert non-income-producing assets into an income stream for you, and can delay capital gains taxes on the sale of highly appreciated property. It can also help you achieve specific education, business and family goals.

Still, only a quarter of affluent households make planned gifts, according to a survey by Giving Capital. Why don’t more people plan their giving? There are several reasons. Among the most common is that planned giving takes time. Many people know little about the details or benefits of planned giving, so they put it off. Many also perceive planned giving as too complex and too expensive, and some worry about jeopardizing their own financial situation through giving.

A comprehensive giving plan can address all of these obstacles and concerns, while allowing you to make a positive and lasting impact to a charity that is important to you.

By |2019-08-14T14:00:12-07:00July 23rd, 2013|Charitable Giving, Estate Planning, Financial Planning|

Arizona Income Tax Credits Help Schools and Working Poor

Arizona offers several tax credits for individuals paying state income tax. They include the Working Poor Tax Credit for donations to qualified charitable organizations, the Public School Tax Credit (including charter schools), and the Private School Tuition Tax Credit. The credits do not reduce your tax liability; rather they allow you to specify how your state income tax dollars are used. You are permitted to take advantage of any or all of these tax credits each year, which can equate to hundreds of your tax dollars being donated to the worthy charities and schools of your choice.

How does it work? It’s pretty simple.

You give money to the qualified organization – for example, $200 to the Salvation Army, for the working poor credit. Then you complete Arizona form 321, that transfers to line 26 on Form 140 and you get 100 percent credit against line 19 (as though you had paid through withholding or quarterly estimates).

If you do your own taxes, read through the Arizona instructions carefully. For the most part, you can look at your form 140 line 19 to determine the maximum credit. Keep in mind, you must pay taxes to receive the credit. In addition, your credits can not exceed what you pay. For example, if you only pay $300 in state income tax, you may only claim $300 in credits in the current year.

These credits are fairly simple to apply, however everyone’s situation is different, and the rules can and do change from year to year. Take the time to review and understand the credits and rules each year.  (For example, there are now two private school credits; please read through carefully if you’re taking advantage of both private school credits).

Most qualified organizations do a good job of explaining the process, as well, so take a moment to explore their websites for information and instructions. You may also wish to consult with your tax advisor or financial planner for additional information and filing requirements of the individual tax credits.

For more information on the public school (including charter schools) and private school tuition tax credit donations, click this link to the Arizona Department of Revenue official site.

For more about the working poor tax credit, including a list of qualifying charitable organizations, click here.

By |2019-08-14T14:00:16-07:00November 27th, 2012|Charitable Giving, Taxes|

Family Foundations: An Estate Planning Option

A family foundation derives its assets from the members of a single family, in which the donor and the donor’s relatives play a significant role in managing the foundation. Aside from helping families channel their philanthropic ambitions, family foundations can form a legacy of community involvement and responsible citizenship for generations to come. Family foundations also offer potential tax- and estate-planning benefits for its founders.

There are two types of family foundations: private foundations and supporting organizations. Private foundations, the more common of the two, offer more flexibility and control (i.e., they can select and oversee their own board of directors and grant-making decisions), while supporting organizations enjoy more favorable tax treatment.

Gifts made to either type of family foundation are generally tax deductible from the donor’s annual income tax, yet these deductions differ depending on the foundation’s structure, the type of property or asset contributed, and the donor’s income level. As a general rule, all gifts to a family foundation are removed from the donor’s estate, avoiding estate or gift taxes.

By |2019-08-14T14:00:17-07:00August 15th, 2012|Charitable Giving, Estate Planning|