Doing good for others while doing well for yourself and your heirs
- Philanthropy is a three-legged stool composed of your money, time and ability. The end goal is to help people out regardless of their ethnic background or religious or political beliefs.
- More than $335 billion was given to U.S. charities in 2013—with 72 percent coming from individuals.
- Smart advisors can help you with advice on both formal and informal giving that supports worthy causes—and your tax mitigation goals.
We’ve seen recent news coverage of the illegal Texas border crossings of young children from Central America. It’s obviously a very contentious issue politically, but there’s an aspect to this that is felt somewhat consistently. And, we have religious organizations, volunteer groups and aid workers that are really helping out the border crossing guards and organizations because they’re just overwhelmed. That’s quintessential Americanism. When we see people in need, especially young children, it doesn’t matter politically what’s going on, we reach out and help.
That’s what philanthropy is. It “sees through” all ethnicity and political or other kinds of beliefs, and gets people really trying to help others out. That’s just one core aspect of philanthropy here in the United States. But philanthropy is a three-legged stool: It’s composed of one’s money, time and ability.
If you consider money, the latest survey from Giving USA indicated that $335 billion was given to charity in 2013. This was a 3 percent increase over 2012, and almost back to the prerecession record levels. Of that, 72 percent comes from individuals, so it’s a substantial amount of personal wealth being donated.
If we look at time and ability, a 2010 study by the Corporation for National and Community Service said that 62.7 million people volunteered for 8.1 billion hours. That’s the equivalent of a $173billion contribution to our gross domestic product!
Formal and informal philanthropy
You can give away (and write off) up to 50 percent of your income in a given year, in terms of cash contributions. You can also give away appreciated assets and other holdings, but there are some restrictions at 20 percent and 30 percent of your income. Keep in mind that there are both informal and formal ways of participating in philanthropy.
Informal philanthropy involves writing checks to your favorite organizations that support your beliefs, your morals and your causes.
Formal philanthropy involves setting up private foundations, donor-advised funds and charitable trusts, among other vehicles, that allow you to gift your appreciated assets and other holdings. That’s what’s driving the involuntary philanthropy trend. If you’re in the highest income tax bracket, 50 percent of your money is going to federal, state and other taxing authorities since the new tax laws went into effect. A lot of folks look at that and say, “Gee, maybe I would be better off giving it to charity,” and we’re certainly seeing an uptick in these kinds of decisions.
Now, philanthropy can be confusing, so I suggest that you consult with your most trusted advisor and have them walk you through the process and your options. Certainly we’re available for a consultation if you’d like to come in and discuss what you can do with respect to both formal and informal philanthropy.
Until next time, enjoy. Gary
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