Archive for February, 2021

Charitable Giving and Your Personal Finances

February 11th, 2021

Philanthropy is Full-Anthropy

Has anyone ever asked you what you would do if you had all of the money in the world? Most commonly, people respond with, “I’d buy a bigger house or travel.” This is often followed by, “I’d donate more money to charity.”

People who are charitably inclined usually are living a rich, full life. We all have some affinity to a specific charity we like to support. As a Financial Life Planner, I have come to learn that charitable giving is an important goal for most people. Yet most of us don’t have a process for funding this goal.

A simple way to meet your charitable goals is to contribute to a Donor Advised Fund (DAF). A DAF is like a holding account created by a sponsoring charity that holds contributions from various donors and manages the charitable donations. The DAF will send you a quarterly statement of your contributions, along with a gift receipt for tax purposes. These contributions can then be distributed to qualifying charities at some point in the future.

You can usually deduct the full value of the charitable gift – whether it is appreciated stock (avoiding capital gain), or cash. The deduction is subject to adjusted gross income limitations. The gift is irrevocable and is also separate from your estate. Any income or growth in the fund is not tax deductible BUT is exempt from taxes. Once the gift is made, you can recommend how the donation is invested, through asset allocation strategies. You can name successors to the account, who then can manage the fund and make grant recommendations. This provides for a legacy of giving that can last for many generations.

You can get your kids or spouses involved and create your own account title. I know families who have semi-annual meetings with their kids and grandkids to discuss where the grants should go. What a great way to introduce philanthropy to kids!

The DAF accounts can be set up with as little as $5,000. You can support multiple charities with a single donation, usually with as little as $100. When you are ready to recommend to the DAF to make a gift to a specific charity, you just fill out a form and mail it to the DAF. The donation from the DAF can be anonymous, or can have your name identified as the donor.

What part do philanthropy and charitable giving play in your value system? Think about causes and organizations you would like to help. Most people that give to charity are happier and healthier. They experience a sense of satisfaction of helping people or specific causes.

John Templeton wrote: “Happiness comes from spiritual wealth, not material wealth… Happiness comes from giving, not getting. If we try hard to bring happiness to others, we can not stop it from coming to us also. To get joy, we must give it, and to keep joy, we must scatter it.”

History of Charitable Giving

February 11th, 2021

Charitable giving is a time-honored human custom that transcends cultures and time. From the very dawn of civilization, human beings have been drawn to the idea of giving to one another. This has taken on a variety of forms through the ages, but one thing has remained consistent: philanthropy, literally love of man, is something ingrained deep within each of us.

The origins of the word philanthropy go all the way back to the story of Prometheus. According to ancient Greek mythology, Zeus thought man much too backward and primitive to share one of the most important resources the gods had: fire. Without fire, man literally lived in the dark, a cave-bound existence without the ability to create warmth, cook, or fashion tools. Zeus looked out on the pitiful lot of humans and decided to destroy them.

The Titan Prometheus, however, had taken a liking to humans. He saw great promise in them, and believed they were destined to do great things. All they needed was a head start, a little boost. He believed that fire would change their existence, so he shared that gift because of his philanthropy, his love for man. It didn’t turn out all that well for Prometheus though as Zeus had him chained to a rock and had his liver plucked out daily by an eagle, which grew back each night. Many years later, Prometheus was rescued by Hercules, who was on his way to another adventure.

This concept of charitable giving was taught by Plato in some of the earliest organized educational efforts in human history. Later of course, like much of Greek culture, this charitable giving became a custom in the Roman world. Julius Caesar himself was much beloved by the Roman citizenry because of his philanthropic efforts to make Rome a better place for all of its citizens. This idea of private charitable giving for the public good found its start, and was here to stay.

Of course, the spread of Christianity throughout the west entrenched the concept of charitable giving. The Apostle Paul wrote to the Corinthians that charity was the highest virtue attainable by Christians. This echoed Jesus sentiments when he told his disciples that loving one’s neighbor was only second to loving God. Charitable giving was now entrenched in one of the world’s major religions.

The Dark Ages would see less emphasis placed on charitable giving. With the relative unity of Greek and Roman culture gone, the world became tribal, and people viewed one another as rivals rather than neighbors. The focus was on conquest rather than philanthropy.

The Renaissance, however, saw a rebirth of classical ideals and philanthropy was among them. As philosophers like Sir Francis Bacon mused on goodness, the idea of charitable giving was central to the concept. Even in government, the term commonwealth was born, focused on the idea that the government’s efforts, whether military, legislative or economic, were all undertaken to foster the common good.

During the 18th and 19th centuries, which saw a drastic division in economic status in both England and America, the notion of nobles oblige the obligation of nobility and the privileged became popular. While many had become quite wealthy either through land holdings or through becoming industrialists, the idea was that there was an obligation among those who were blessed with wealth to engage in charitable giving to benefit their fellow man. Just as they had been blessed, they believed they too had to bless others.

Large private foundations were born during this era through the charitable giving of men like John D. Rockefeller and Andrew Carnegie. Carnegie, in fact, left the vast majority of his wealth to the city of Pittsburgh for use in public projects. History often depicts these men as robber barons, but their charitable giving was unmatched in their day.

It is doubtful that we will ever stop loving our fellow man or engaging in charitable giving. Something within us cries out to do so. Our history is rich with illustrations of charitable giving and it is incumbent upon us to continue that wonderful tradition.