Planned philanthropy can be an honorable and selfless family tradition.
We were recently talking to a client about their charitable intentions. They informed us that charity has always been an important part of their financial planning, but they have always done it quietly. They made it clear to us that they don't talk about their charitable contributions to their children or friends.
We also learned that they don't make large single gifts, but their annual giving is significant, as far as they are concerned. They certainly take advantage of the charitable tax-deduction, but their giving isn't tax-motivated. They feel it is important to give back to those less fortunate. They are also very supportive of their religious congregation. Not only have they financially supported organizations that are important to them, they also volunteer their time throughout the year.
As we discussed their short-term and long-term intentions, they were concerned their children might not be as motivated to make contributions of time and money. While the kids saw their parents give their time, they didn't see them write checks. They asked us the following question: How can we motivate our children to make annual financial contributions to charity?
We recommended a family gift-matching program. Many large corporations will match an employee's charitable contribution. They usually have a minimum and maximum contribution that is matched. Couldn't the family establish a similar program?
Establish a minimum and maximum amount to be matched.
Are there any charitable organizations that will not be matched? Or will the matching be limited to specific kinds of charities?
While taxes might not be the primary motivator, tax planning might be important. The person in the highest marginal tax-bracket should make the financial contribution. If the child is in a low tax bracket, maybe the child makes a gift to the parent and then the parent makes the charitable gift.
Offer this program to grandchildren, if appropriate.
Most importantly, discuss your charitable intentions with your children. Talk about what charities have been important to you. Ask what is important to your children or grandchildren. Communicate the rules of your matching program. Decide if there are specific or types of charities that are off-limits for matching. Make this an annual process and start when your children and grandchildren are young. Talk about this during the holidays or on birthdays. Help your family understand that charitable giving is important to you. Don't keep it a secret!
At the Raskin Planning Group, we want to help you think of yourself as a "steward" of your family's wealth. What can your wealth do for you, your family and your community?