Plan well to avoid random acts of giving

Plan well to avoid random acts of giving

Article posted in Values-Based on 17 May 2016| 1 comments
audience: National Publication, Bruce DeBoskey, Philanthropic Strategist | last updated: 18 May 2016


In this article, author Bruce DeBoskey recommends that the integration of philanthropy into the estate plan should be much more than a financial and tax transaction. In fact, he suggests that the possibility for true family transformation exists with the right advisors at the table.

Well-off individuals and families recognize the need to plan for their future security and their legacies — and often go to great lengths to do so. Usually, they work closely with experts who make up three legs of the planning table and help them achieve sophisticated tax-, financial- and estate-planning goals.

Tax experts advise about the tax consequences of income and investments and work to reduce tax liability. Financial advisers guide investments and help ensure long-term financial security. Estate planners (sometimes working with insurance experts) help establish legacy vehicles to achieve lifetime goals and support for descendants.

Each of these experts also can play a role in the development of philanthropic plans, which constitute the essential fourth leg of the planning table.

Tax advisers can help clients understand the tax ramifications of their philanthropic efforts. Financial advisers can help determine charitable giving capacity; they also can manage philanthropically committed assets. Estate planners can establish foundations, donor-advised funds, and charitable trusts and bequests.

However, this is not their primary focus. As valuable as these experts are in their specialized fields, they are rarely experts in the techniques, strategies, tools, impacts and evaluation of philanthropy.

Philanthropy should be transformational

Individuals may understand how much they can afford to donate, and the tax impacts of doing so, and may even have a donor-advised fund, family foundation or trust vehicle through which to do it. But becoming an effective philanthropist (rather than merely a generous donor) means planning to optimize the efficacy of giving. Through this tested process, philanthropy becomes transformational (rather than just transactional) for both the donor and the community.

The same intellectual resources and rigor that were used to earn money in the first place should be applied to philanthropic efforts to distribute that money. Investing well in the community requires the same attention as investing well in the stock market or a business.

To generate wealth, the successful entrepreneur, executive or investor relies on tools such as research, analysis, expertise, strategy, organized implementation, careful evaluation and constant adjustment. By using these same tools, philanthropists will achieve greater social returns and impact. In addition, they will be far more satisfied with the results for themselves and their families.

What are the best resources for philanthropists? Online guides, books on philanthropic strategy, seminars and workshops are easy to find. Community foundations — there are more than 750 across the United States and 1,800 worldwide — frequently offer planning services to local philanthropists.

Philanthropic consultants: A sturdy fourth leg

Increasingly, experienced philanthropic consultants are acting as a sturdy fourth leg to the financial-planning table — working alongside the other three categories of trusted advisers. Today, experienced advisers can be found in many communities. To find a professional with the necessary experience and expertise, search online using the terms "philanthropic strategist" or "philanthropic adviser."

Philanthropists should carefully examine the reasons behind their decision to share assets with the less fortunate or with deserving causes. With professional guidance or on their own, they need to address the following questions:

• What do I hope to achieve — for myself, my family, my business, my community and beyond — by being philanthropic?

• Which tools, techniques and strategies are most likely to help me achieve my goals?

• How do I successfully engage the rising generations in the family to help achieve shared goals — now and going forward?

• How do I evaluate my philanthropic efforts to know if they are succeeding?

• How do I closely align the investment of philanthropic assets with family or organizational mission and values?

Charitable donations can change — even save — people's lives. Donations can preserve endangered species, feed the hungry, fight poverty, offer education and opportunity, encourage sustainability in a threatened world and much more. They can also help bring a family or an organization together around shared values and goals.

Without careful planning, however, charitable donations can be ineffectual. Most successful individuals pay close attention and devote considerable time planning their investments in the stock market or their businesses. Successful and fulfilled donors will pay equally close attention to their philanthropic plans.

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Re: Plan well to avoid random acts of giving

Bruce-this is a thoughtful & important article! You aptly explain the importance of bringing the Team coming together for philanthropic impact...thanks for giving us a seat at the table! It's important that we continue to talk about our role-as you did so well-to help other Front Line Advisors understand how we can help them as well as their clients!

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