TRENDS IN AND ADVICE ON PLANNING FOR GIVING.
There was a time when giving part of your estate upon your passing was the most popular way to allocate money for philanthropy. Lately, however, there’s been a noticeable shift in how people like to give: they’re doing it while they’re alive.
Garrett Alton, executive vice president and Southeast region president of Wilmington Trust, is a high-net worth wealth advisor who sees it first hand as the company manages around $158 billion. “People want to see how their charitable giving during their lives has made a difference,” he says. “This is a big change from the past when planned giving was typically donating X when you died, and you never got to see the good that you did.”
Another transformation Alton has seen in charitable giving over the 31 years he’s been in wealth management is people wanting more than ever to see their donations in action in their communities. This might mean carefully selecting charities that can have an immediate and evident impact versus donating to a large endowment and not knowing what your dollars are being used for specifically.
“The world has shifted to ‘how do we donate money to actually make a difference in peoples’ lives,’” says Alton, who lists one of his favorite Atlanta charities as The nsoro Educational Foundation that focuses on supporting young people who age out of foster care and need financial support for living expenses during college beyond tuition. “Typically, if you age out of foster care, there’s a 4% chance that you go to college. With mentorship and housing and food security throughout the year, nsoro Foundation’s youths’ graduation rate is 81%. It makes a massive difference.”
When you’re deciding on which nonprofits to give to and how much to allocate to them, whether annually or as part of a long-term estate plan, Alton suggests seeking the advice of a quality advisor who has both extensive experience with clients in your income range and a long, tenured reputation.
“To find the right person, ask questions like, ‘What’s your average client [portfolio] size?’ and ‘How many clients do you have?’ If you’re worth $100 million, don’t go to an advisor whose average client is worth $50K, and vice versa,” he says. What’s more, look for a financial advisor or a CPA and attorney duo who understands the constantly changing tax law, as well as legal components, estate planning and more.
Finding specialized service providers is key. “Not every CPA understands family wealth. And your attorney can be the best trial lawyer in town but might not know anything about estate planning,” says Alton.
A huge mistake he and the team at Wilmington Trust often see is setting up charitable entities, such as foundations, for purely tax advantages. “The root purpose of the giving should be the charitable inclination of the client who wants to continue their legacy and enjoys philanthropy. The tax benefit is not dollar for dollar,” he says. Alton says there is a tax advantage when creating a charitable trust for those who have a taxable estate worth more than $10 million.
Alton also suggests making sure the charity you’re giving to has a high probability of long-term success and is financially stable. “A lot of new ones can be a way for their creators to make an income. Some give away 90% or keep 90%. It’s public record. On the Secretary of State website, you can see how much of the money is going to the beneficiaries of that charity versus the founders.”
Lastly, if you do end up naming a nonprofit organization in your will, name more than one. Alton says, “One might go out of business by the time you die. If that happens, then the others will receive the funds.”
Managing Editor and Wellness Columnist at Simply Buckhead. Blogger at Badass + Healthy.