Florida Estate Planning, Probate and Asset Protection

When Charitable Giving Goes Global

Increasingly, global-minded philanthropists want to support causes overseas, triggering unique legal and tax challenges.

International borders aren’t even lines in the sand, in most instances. When it comes to crossing borders for charitable endeavors, one would think processes and protocols would help ease the effort. Unfortunately, the globalization of individual charitable giving, just like the globalization of the economy, has brought with it more complexity and attending legal challenges.

This is an increasing trend, too.

According to the 2012 Giving USA Study of charitable giving, international giving has been increasing for the past several years. This increase has come despite the struggling economy and overall challenges to domestic giving. In fact, international giving has experienced a 15.2% growth from 2009 to 2011, with the data yet to come for 2012.

To gain an appreciation of the challenges that have come with this unprecedented rate of growth, it’s worth reading a recent article by WealthManagement.com titled “Giving Without Borders.”

In practical reality, giving without borders often requires analyzing all relevant “borders” to determine how each side of the border will account for the gifts. Indeed, “gift” can be something of a misnomer with the rise of “impact investments.” All the same, when an individual decides to transcend borders with generosity, the laws of each nation and a tangle of international law may come into play.

Accordingly, if you are inclined to make your charitable mark outside of the United States, then be forewarned and forearmed when it comes to the potential tangle of laws you will need to navigate.

Reference: WealthManagement.com (January 14, 2013) “Giving Without Borders”

Charitable Giving Slows for Überwealthy

America’s billionaires gave less in 2012 than in 2011, a new Chronicle tally shows.

Well in the wake of confetti and political rancor brought on by New Year’s Eve and New Year’s Day, respectively, the numbers are starting to come in on the state of charitable giving for 2012. Unfortunately, and according to a summary post by the Chronicle of Philanthropy entitled “America’s Wealthiest Donors Slow Their Giving,” 2012 was not a good year for charities or a big year for donors.

In fairness, 2012 will first and foremost go down as a year of great indecisiveness, whether it was the presidential election or the deal that brought us over the fiscal cliff. But political indecisiveness gives rise to a tricky environment for charitable intentions. That said, the largest gifts by American philanthropists totaled a whopping $5.1 billion, except when you account for the fact that Warren Buffet gave away $3 billion of that total. By comparison, the largest gifts by American philanthropists totaled $2.6 billion in 2011. Without Buffet’s gifts, the 2012 total would have been $2 billion, falling under 2011’s totals.

Now, this kind of assessment isn’t an entirely fair estimate of the direction of the charitable energies of all donors. In fact, the list only accounts for the top ten public donors, thereby ignoring the many small donors who you may recognize as those not being featured on the cover of Forbes. Nevertheless, it seems to be indicative of an overall mood.

So, if 2012 was all indecision and waiting, what can we expect in terms of philanthropy for 2013 now that we’ve got some answers and direction on the tax front?

What are your plans and what is important for you as a donor?

Reference: The Chronicle of Philanthropy (January 1, 2013) “America’s Wealthiest Donors Slow Their Giving”

“GiveSmart.com” - Charitable Giving Pointers on the Internet

Anybody can eavesdrop on a conversation with the nation’s most prominent donors by watching a series of new video interviews that feature Eli Broad, Melinda Gates, Ted Turner, and about 50 other prominent philanthropists.

With the end of year in sight and the holidays fully upon us, this is the season of giving. Unfortunately, it’s not always easy to come up with causes worthy of your philanthropy, let alone those you can trust to be good stewards of your contributions.

When in doubt, turn to professionals for advice, right? In this case, who better to consult than the great philanthropists of our day.

Fortunately, you don’t have to try to guess, assume, or attempt psychoanalysis from afar to get sage advice from big philanthropists and donors. No, as trumpeted by the Chronicle of Philanthropy (see “The Giveaway”) and other sources, there is an interesting new resource available to all in a new website called GiveSmart.

In essence, this website lets the philanthropists speak for themselves and on whatever topic they wish. If you’re interested in charitable giving on any scale and also deciding how to go about doing it, consider consulting some of these important philanthropic voices to motivate you.

Reference: The Chronicle of Philanthropy (November 27, 2012) “The Giveaway”

GiveSmart - GiveSmart.com

Anonymous Charitable Giving

“ …some wealthy people today prefer to give anonymously because they feel very lucky that they had the brains or the right family to have more than the person down the block,” Salamon once told me. “They want to set the balance straight and don’t want a lot of credit for it.”

The act of giving in itself is extremely rewarding, which is why many donors do not wish to be recognized for their gifts. These donors prefer to give anonymously to avoid uninvited attention for many reasons, ranging from religious convictions to protecting themselves from theft.

Whatever your reason, consider taking steps to ensure your own anonymity even as you go out and try to ensure the wellbeing of your favorite charities. How do you give anonymously?

In short, this is a common predicament and there are several established charitable vehicles for giving with solutions that promise some amount of anonymity. Some, as you may expect, are better than others.

For a breakdown and analysis of these vehicles, take a look at a recent Forbes article titled “How To Stay Anonymous When You Give To Charity.” Some examples on how to give under the radar include setting up a private foundation, using advisors as intermediaries, and donating online.

In the end, the best solutions tend to vary based on the nature of the assets you intend to give, the scope of your giving, and on the charitable recipients.

Reference:  Forbes (September 19, 2012) “How To Stay Anonymous When You Give To Charity”

Key Charitable Donors Give Big

Yes, legacy is important, but not as important as making an impact as quickly as possible. And billions of dollars can make a tremendous impact — it can truly change the world.

The key donors in the world of charitable giving think big when it comes to giving away their fortunes, and they have even bigger goals in mind for their charities.

A recent Forbes article offers some insights into the thoughts and intentions of uber-wealthy philanthropists. The grist for this journalistic mill was recently a summit held in New York. The article bears the catchy title of “How to Give Away A Billion Dollars.”

It’s worth reading the original article, if not only for a few reported mission statements. One thing to note is the tension between farsighted concerns and legacy in particular, against the desire to see immediate effect and business-like efficiency. This is a very real tension and just may affect how you go about your own charitable giving.

To gain more insight on this topic, you can also research the future of charitable giving with Forbes’ companion piece titled “How The Next Generation Of Wealth Is Revolutionizing Philanthropy As We Know It.”

References: Forbes (September 18, 2012) “How to Give Away A Billion Dollars”

Forbes (September 18, 2012) “How The Next Generation Of Wealth Is Revolutionizing Philanthropy As We Know It.”

Charitable Donors (And Charities) Hit Hard by Recession

Many fundraisers say they still can’t raise as much as they did before the economy soured in 2008. Particularly difficult to come by, they say, are gifts from affluent donors.

We’ve all been affected by the financial crisis surrounding the recession. With less money coming in during these tight financial times, there is less available to spend …and also less to give to those who are in need.

The Chronicle of Philanthropy offered some quantifiable perspective on the crisis in the non-profit sector over these past three years in an article titled, “Giving by the Rich Dropped $30-Billion During Recession.” Indeed, from 2007 to 2009 charitable giving dropped by some $31 billion amongst those with incomes of $200,000 or more according to recent data from the IRS. If you move to the other end and count individuals earning $100,000 or less annually, the charity deficit runs up another $4 billion or so.

Keep in mind, since these are IRS numbers, this only reflects actual charitable contributions for which deductions were taken. Ultimately, these numbers will be seen and felt by the non-profit sector, to include your favorite charities and those they serve.

As we approach the end of the year and the season of giving, have you made plans for your charitable gifts this year?

Reference: The Chronicle of Philanthropy (August 29, 2012) “Giving by the Rich Dropped $30-Billion During Recession”

Giving Real Estate to Charity? (Remember the Appraisal!)

A California entrepreneur got a harsh lesson on the rules of charitable contributions… when the U.S. Tax Court denied his $18.5 million deduction for real estate donations —not because he inflated their values, but because he didn't follow the rules.

When it comes to charitable giving success, you must dot all the i’s and cross all the t’s. Remember, with the IRS and the tax court, the devil truly is in the details.

This was the lesson Joseph Mohamed, Sr., a generous (and wealthy) real estate developer, recently learned. Reuters recently reported on his case in an article titled “A harsh lesson on charitable contributions.”  

It seems Mr. Mohamed had more than the requisite charitable intent but failed to follow the strict rules required to claim the deduction for his generous contribution of real estate worth in excess of $18.5 million. The problem? If you make a charitable contribution in the form of real property worth more than $5,000, then the real estate must be properly appraised and the appraisal must accompany the donation form.

Unfortunately, Mr. Mohamed (who, ironically, is a certified appraiser) failed to follow this fundamental requirement. Even though the tax court conceded that the real estate in question likely was worth at least $18.5 million, the deduction was not granted.

Reference: Reuters (June 1, 2012) “A harsh lesson on charitable contributions”

Charitable Giving Delayed… Is Not Charitable Giving Denied

This Year's Most Generous Billionaire Philanthropist Has Been Dead Since 2006

It’s pretty impressive to top the Chronicle of Philanthropy’s list of America’s 50 most generous donors, but it just defies the imagination to make the list 5 years after passing away. Still, that’s the story of 2011 and the late Ms. Margaret Cargill.

This fact was swiftly picked up here, in a recent Forbes article, and as it turns out the reason for such successful giving can be traced back to some complicated estate planning and finance work.

Cargill is a name that, depending upon your exposure to agribusiness, is either an utter unknown in the discussion of wealth (the media is infatuated with Mark Zuckerberg these days) or an utter no-brainer. And Cargill is synonymous with massive agribusiness, having topped the list of America’s Largest Private Companies for all but two of the last 24 years. The late Margaret Cargill was heir to the fortune.

At her death, Ms. Cargill left all of her shares of Cargill stock to be split between two charity foundations, the Anne Ray Charitable Trust and her own Margaret A. Cargill Foundation. But don’t forget, Cargill is a private company, albeit a large one, and that makes the stock rather difficult to value and liquidate.

The trust and the foundation sat idly by until a fortuitous moment when Cargill sold its shares in another company, a public company called the Mosaic Company, which gave them the opportunity to exchange private Cargill stock for public stock that could be liquidated to the tidy sum of $6 billion (that process hasn’t quite finished up, but they’re counting it for 2011 anyhow).

It’s important to remember these kinds of limitations when it comes to assets in either estate planning or charitable giving. Ms. Cargill’s wealth was essentially locked up in private stock and so, despite the inefficiencies of doing so, that is what she gave when it came time to bequeath and give that wealth away to charity.

Luckily, however, Ms. Cargill did her charity work through the powerful intermediaries of charitable trusts and foundations, which were in a position to make such gifts work.

At least there’s next year for Paul Allen, George Soros, and Michael Bloomberg, the next three (living) names on the list of millionaire donors, but 2011 belongs to Ms. Cargill.

 Reference: Forbes (February 6, 2012) “This Year's Most Generous Billionaire Philanthropist Has Been Dead Since 2006”

Charitable Giving – A Family Affair

We have continued and adjusted our family giving rituals over the years, and I have learned a lot about how to do it right.

Financial skill is far from an inherited ability: it is learned. So, too, with charity. The drive to give (and the know-how to do so well) is often taught rather than genetic. A novel idea, then, is to begin the family charity tradition.

During the recent holiday season, an article in Reuters addressed this matter. When it comes to charity, to include beginning a family charity tradition, there should be no “seasonal” limitation. In other words, there is no time like the present.

Giving to charity, whether in modest gifts or in larger ones, can be a family activity and a lesson to your children with just a bit of foresight. For example, let your children choose where to give and, perhaps, teach them why you give as you do.

Just as important as why you give, consider teaching your children “how” to give. How do you give efficiently or to effect the greatest gain? How do you understand the financial decisions that go into process in the first place?

Of course, it’s bound to be a learning experience for you, too, and you might find that it’s a difficult one. For a bit of advice, check out the original article.

Reference: Reuters (December 23, 2011) “How to create a family charity tradition”

 

Donor-Advised Funds For The Savvy Philanthropist

Is using a third party a better way to donate your charitable dollars?

There has been a lot of interest this year in “donor-advised funds (DAF),” as a savvy tool for charitable giving. As we head further into the season of giving (and, with it, year-end tax planning), and 2012 thereafter, it might be a perfect time to consider establishing your own DAF.

As a recent Reuter’s article asked, “do donor-advised funds make sense?” They certainly do from a tax standpoint, as you receive a charitable deduction upon giving to the fund, just as you would for giving directly. You then gain the ability to “advise” the fund, along with the other investors, toward worthy charities as you discover them.

The final say comes down to the fund directors themselves, and the other investors may have opinions that vary from your own. It does mean that you can give large amounts of money to charity without already having formulated a specific and exhaustive plan regarding to whom and how much you wish to give.

That said, with some DAFs, there may be other detractions, like the administrative costs. After all, these funds are overseen by the major money-management companies and they will charge fees for the service, usually in relation to the amount of your gift. As the thought goes, being charged for a money-manager to make more money for you is one thing, but to be charged from the money that was to go to a good cause might just be something else entirely. There certainly are those would be philanthropists who don’t like the practice for this reason.

Local “community foundations” are an excellent alternative to the DAFs managed by the for-profit major money management companies. Their fees typically are much lower and the local community itself benefits by being, well, local.

As with anything financial, it is best to do your own due diligence before proceeding. For more reading you can check out the New York Times article from a little while ago written by a Boston College Professor, Ray Madoff: “Tax Write-Off Now, Charity Later”

Reference: Reuters (December 5, 2011) “Charitable Giving:  Do Donor-Advised Funds Make Sense?”