March 7, 2024 • 40 mins
Unlock the secrets of meaningful philanthropy and ensure your generosity leaves a lasting impact. Joining me is Christopher P. Woehrle, JD, LLM, an adjunct professor of taxation at the Widger School of Law, Villanova University.
Chris is a tax attorney & philanthropy expert with a heart for giving. In this episode, we explore the depths of strategic philanthropy. Chris will share his wisdom on how deliberate planning trumps impulsivity, paving the way for contributions that not only resonate with your personal values but also offer significant tax advantages. The discussion pivots from the why to the how of giving, presenting a plethora of options for those integrating philanthropy into their financial fabric.
The art of giving extends beyond the individual; it's a potent family endeavor with the power to bind generations through shared values. We dissect the importance of a family philanthropy plan, emphasizing the crafting of a mission statement that acts as a compass for your charitable journey. I share strategies for including children in philanthropic activities, ensuring the notion of giving back is a legacy as inheritable as the wealth itself. Chris and I agree – philanthropy isn't just about money; it's a teaching tool, a vehicle for instilling empathy, and a catalyst for preparing the young minds of your family for the roles they'll one day assume.
As we wrap up our conversation, we navigate the often complex intersection of charitable giving and tax benefits. We demystify donor advised funds, private foundations, and charitable remainder trusts, equipping you with the knowledge to make savvy decisions that benefit both your heart and your wallet. And a gentle reminder: though Chris and I offer a banquet of insights, always consult with the appropriate financial professional for guidance tailored to your specific circumstances.
About Christopher P. Woehrle, JD, LLM:
Chris has served as a member of the editorial board of Trusts & Estates magazine since September of 2014. Chris has written extensively on how to improve retirement income through philanthropic planning. In recognition of his writings on use of split-interest charitable giving in coordination with financial and retirement planning goals, Chris received from Trusts & Estates a 2017 Distinguished Author Award.
Prior to his arrival at The American College, Chris enjoyed a seventeen career as a senior development professional and executive. During his tenure as Senior Associate Vice President and Acting Senior Vice President of Institutional Advancement at Drexel University, Chris was a five time achiever of the Philanthropy 400 status, awarded to the most productive development programs in the United States.
Chris is married to Lann Woehrle, MD, a retired member of the medical staff at Pennsylvania Hospital. In addition to supporting his wife’s philanthropy in pancreatic cancer research, Chris has endowed a named scholarship at his prep school and supported two bricks and mortar campaigns each at the major gift level. Chris & Lann are members of the Leadership Board of the McGovern Institute of Brain Resear
Advisory services are provided through Prosperity Capital Advisors LLC (“PCA”) an investment advisor registered with the United States Securities and Exchange Commission (SEC). Views expressed herein represent the opinions of PCA and are not intended to predict or depict performance of any particular investment.
All data provided, including any reference to specific securities or sectors, is provided for informational purposes and should not be construed as investment advice. It does not constitute an offer, solicitation, or recommendation to purchase any security. Consider your investment objectives, risks, charges and expenses before investing. These views are as of the date of this publication and are subject to change. Past performance is
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:10):
Welcome everybody, and we've got a great episode
here at the Complete WealthManagement podcast.
I've got a very amazingcolleague and friend, somebody
I've had the opportunity to getto know over the last.
What's it been, chris?
Now over four years I thinkwe've been oh, my, oh, my God
going around the countrytogether In 2019, we started.
Chris, give us a little bit ofbackground on your kind of
(00:33):
professional side of thingsbefore we get into some of also
the episode topic today, whichis charity and philanthropy and
something that I know you're anabsolute expert in.
Speaker 2 (00:45):
Thank you, Well, I've had really three distinct
careers.
I'm trained as a lawyer, I havean LLM in tax.
The first third of my career Iwas a business and estate
planning lawyer, representingusually sellers of companies,
and also led along the way tophilanthropy.
And I got recruited to become adirector of plan giving at an
(01:10):
R1 university, worked my way upto the number two, then later
became the head of plan givingat an Ivy League Medical Center,
the Princeton Health CareSystem Foundation, and then my
third career has been in quoteacademe or practical academe.
I held an endowed chair at theAmerican College, then in Brydon
(01:34):
Marr, now in King of Prussia,and then I later headed the
advanced designation departmentat the college for financial
planning out in Colorado.
And along the way, since I sawa lot of good habits and
practices of the people I workedwith, I became in a position to
give away money myself and, asI mentioned to you offline, it's
(01:58):
now official I in the society,the Ruslan society, at the law
school at Villanova, and I guessI can say philanthropy first
and last.
Refuge of the scoundrel.
I'll let the audience as welisten determine whether I'm the
first or the last, but ifyou're, if you're in a position
(02:19):
to give.
I think it's very important youdo.
Speaker 1 (02:24):
Certainly by way of technical background.
You know, chris there's there'snot too many in the United
States that I think you knowknow as much as you know
technically about the topic thatwe're going to talk about with
your background and training.
And then it certainly soundslike you've convinced a lot of
people to give a lot of moneyaway over your career, including
yourself.
Speaker 2 (02:43):
Yeah, I think that's fair.
Some of the people that Iworked with had great resources
and there's an IM pay designedbuilding at Drexel University
that I was involved with.
There's a college named Drexelafter a very prominent wealthy
family, so it's wonderful to doit.
(03:04):
But you know what struck meabout both of those situations?
Although there was, you know, afinancial element to when they
gave and how they gave, theyreally had to come to a core
question why do I want to dothis?
And that might be, you know, agood jumping off point for any
(03:26):
client who, by being in theright place at the right time,
getting sound counsel from yourfirm gave and your knowledge of
taxes, decide okay, I know Ihave more than I probably can
ever spend.
I think I have more than mykids can probably ever spend, so
I want to start withphilanthropy, but I really don't
(03:48):
know how.
Speaker 1 (03:49):
Yeah, that's a great topic and I think in this
episode what we'll do is we 'llprogressively up the ante all
the way to the point where youcan get a university named after
you.
But let's kind of talk, youknow, on a smaller scale.
First, because we have a lot ofclients at Allison Wealth that,
to your point, they have areally great income.
(04:12):
They've even started toaccumulate some substantial
assets and they've realized,like they have enough for
themselves.
Or, quite frankly, even some ofthe clients that are still
accumulating, they have such anincome and they have causes that
they care about that they wantto carve out a portion of the
income and be able toparticipate in different
(04:34):
charitable efforts.
And so, you know, one of thethings that I've really seen is
that so many clients participatein what I would call checkbook
philanthropy instead ofstrategic philanthropy, and what
I want you to do is share someinsight into, kind of how to be
a little bit more strategic andgive some of our clients things
(04:56):
that they can think about, basedon your personal experiences.
But what I mean by checkbookphilanthropy first is that you
know there's I know I'm guiltyof this at times like causes
will come to me and say hey Dave, can you contribute to this?
Or I go attend a fundraiser andyou know I like the cause and I
write a small check and itmight be a hundred bucks, it
(05:17):
might be 500 bucks, it might be1000 bucks, but there's not a
lot of strategy to it.
It's very reactive, it's notproactive, it's not like us
sitting down as a family andthinking about what our core
values are and what our missionstatement is.
It's just, you know, I'm at anevent and somebody's trying to
do a fundraiser, and so you knowthere's there's nothing wrong
(05:39):
with that by any means.
For everybody who's doing thingslike that, I think it's a great
way for you know thesedifferent charitable entities to
be able to raise some money.
And David Roth is on here withus.
Hey, david, good to see you,good to see you both.
So you know, and we know, aswe're talking with clients about
this, there's certainly sometax benefits that you can kind
(06:00):
of parlay in with your givingeffort.
Now, you know, for those of youwho are taking the standard
deduction, you know there's somethings to think about in terms
of if you're actually getting atax break for giving to these
charities and how you're givingif you're itemizing your
deductions.
There certainly could be someother tax breaks, but there's
(06:22):
also, like all these differentvehicles, that we could use,
right, chris?
Speaker 2 (06:27):
Oh, absolutely.
And I I'd like to combine whatI call one of the Mount Rushmore
tax deductions and that is thegift of appreciated property,
whether you give it directly tothe charity or in a minute we'll
talk about donor advised funds.
But why do I have it on myMount Rushmore of most important
tax deductions?
Well, think about it.
(06:48):
Can you think of any provisionin the code and I know both of
you are very versed in the codewhere you legally can get a
deduction in an amount greaterthan what you paid for?
You know you bought your Googleat a thousand.
It's now worth many multiplesof that.
You get the deduction out themany multiples over what you
(07:09):
paid for.
That's extraordinary.
And it's not even a taxpreference item for the AMT.
So that that's wonderful.
And then to the situation wherea lot of clients may be in
where they really don't get abenefit of itemizing because the
standard deduction is so highright now.
A very good technique is to, ineffect, bunch all your future
(07:30):
contributions and put it in adonor advised fund.
So maybe you have you give fiveyears worth of contributions to
the DAF.
That's a public charity.
You get the most favorablededuction amounts like it's a
war, public charity and you canparcel out the money as the need
arises so you can makethoughtful decisions.
(07:53):
So to go back to your question,like everyone's asking you for
money, you're invited to all theevents, black tie or otherwise,
and, uh, you feel compelled togive.
When you've got in effect yourcharitable piggy bank, I think
you can say, okay, I've got tobe more thoughtful of this.
And you can say that's what thebudget is.
(08:14):
I'm not comfortable politelyturning down requests for
support and, depending on yourresources or inclinations, you
might adopt what I'll call the$1,000 test, and that is is this
a charity?
I think merit's $1,000.
If not, maybe you're justgiving something because you
don't like turning people down.
(08:35):
You were invited to the event,but is it a $1,000 charity?
In your mind it may be.
You may not know enough to sayit isn't, but that gets you a
little more disciplined aboutwhy am I doing this?
And there's been a study ofphilanthropists and one of them
is the seven faces ofphilanthropy.
(08:56):
And one of the faces ofphilanthropy is I'll put it in
polite terms you're a marketerof yourself, or the cruder term
is your self promoter.
So you're giving verystrategically so that you are
known in your community as oneof the go-to people, one of the
reliable people to be supportingthe charities, and there's,
(09:20):
frankly, nothing wrong in that.
Speaker 4 (09:21):
But it's good to acknowledge to yourself while
you're doing that yeah, and onething I would say that it's like
kind of a light bulb thatclicked with me when we're
talking about this wholecharitable giving and what to do
.
And maybe, chris, you canexpand on this a little bit more
.
Dave, you were saying that youhave that checkbook mentality of
doing it, where you're writinga check, but I think what I've
seen is, when you plan this out,two things happen.
(09:43):
One, you can be moreintentional about where your
money goes and two, you couldactually give more money.
I mean, that was a big clickingpoint for me is that if you are
smart about this, you canactually give more to these
charities than you would have ifyou just did it in a
half-passard way.
So you get to be moreintentional and you might have
more that's going to net to them.
Speaker 2 (10:01):
Yeah, and I think the value of that too is every
organization, from the mostresource to the least resource.
They have to prioritize whothey're going to spend time with
and if you're already giving ata good level, you're going to
be identified as someone forgreater involvement.
And there are donors who wouldlike that.
(10:23):
They would like to see the nutsand the bolts of how a charity
goes about with their literacyprograms or feed the poor
programs or whatever.
And then there are others.
It's like very interesting,it's wonderful.
I have so many demands on mytime, I can't do it, but maybe
(10:46):
your spouse or your adultchildren can be involved.
So that's one of the advantagesof being able to be a reliable
and generous contributor.
You're going to be given theopportunity to know these
organizations at a deeper level,because that's good business on
their end, because there's asense in the general public that
(11:09):
charities they're not forprofit and they're these
well-intentioned do-gooders whoaren't really running a business
.
But that's not true.
And the irony is and I'veobserved this over my working
career the organizations thatarguably least need the money
(11:29):
and I won't name names, but theyhave the easiest time getting
it because in part, they knowthere's no question, the
organization is going to bearound.
There's no question, or modestquestions, that it's well run
and reasonably efficient.
So there's a certain Darwiniansurvival of the fittest with the
(11:51):
solicitation of funds as to whoreally gets them.
Speaker 1 (11:55):
So what I'm really kind of hearing and thinking
about how to think about yourown strategic charitable giving
foundation, if you will is and Idon't mean set up a charitable
foundation, I mean thefoundation of your household is
the first thing you need to dois make a plan, and the three
things that I've seen and, chris, I'd love to hear your insight
into these is number one sittingdown and mapping out what your
(12:21):
family's core values are.
I know running a business thishas been incredibly helpful in
the businesses that I've hadthat are establishing with the
core values of the business, howwe hire, how we reward, how we
retain, how we promote thetalent.
Right and I think, for a familyto establish what those core
(12:41):
values are.
And then setting up andestablishing some sort of family
mission statement and then, toDavid's point, a corresponding
budget of what your goals are.
Do you have annual giving goals?
I just met with a client morerecently.
They want to be able to give ahuge amount of money each year,
not just wait till they're deadto give the money.
(13:03):
Other clients it's more modestfive, 10, 15,000 dollars a year.
But, chris, kind of talk aboutthose components of actually
making a plan.
Speaker 2 (13:12):
Yeah, you've alluded to it, what I'll call a
charitable mission statement,and the goal is, with the
mission statement, first toreach a resolution and put it
down on paper.
There's something powerful,reducing all your thoughts and
feelings to writing, because itstares back at you and when you
(13:33):
see it staring back at you, youmay not quite agree as much as
you thought or you realize theneed to make adjustments.
So you're trying to figure outwhat do you care about most and
maybe, as an addendum, is thereanything you're hoping to change
?
Are you trying to providegreater access to education,
(13:55):
greater access to what I'll callfood security?
Those are great things.
Also, it's the chance to take aninventory of what you're
already giving to and askingyourself, going back to your
earlier statements like why am Idoing this?
I mean, they asked me for money.
I don't want to turn them down,but why am I really doing this?
(14:16):
So values, causes and then thelast thing that I think people
in the end come to answeringthis question the region or
where, no matter how manymillions, hundreds of millions,
billions money will not solvethe problem in full.
I think it can ameliorate a lotof the worst parts of any
(14:39):
problem, but want to see where Ican do the most good.
The other advantage of doingthat, by the way, is not only
focusing your philanthropy, it'sgoing to eliminate a lot of
unnecessary requests fromoutside your jurisdiction.
That in and of itself, is agood thing.
Speaker 1 (15:00):
Well, I think that's such a great screen is because
sometimes you know, especiallyif you've amassed a lot of money
and start giving it away, I'msure there's no shortage of
people who are gonna be reachingout and calling you to try to
get more and more.
And by having your core valuesand your family mission
statement documented, it givesyou a great screen of not
(15:22):
necessarily what to say yes to,but, more importantly, what to
say no to.
Speaker 2 (15:27):
Yeah, I think that a common observation all here of
people who can give a lot is Ihad no idea there were so many
charities and they're justtalking about their relatively
small geographic jurisdiction.
So I think that's important.
And I think the other thingabout having a systemized way of
(15:51):
giving it doesn't have to bethrough a foundation, but if it
is through a foundation, atleast you can say, okay, if it
meets the guidelines, you maysubmit a formal request.
But I alone am not the decider.
It's gotta go through a process.
So, of course, if the result isnot good at the end you can
(16:13):
blame the other members on thecommittee and keep your good
standing.
Speaker 1 (16:18):
What a lot of our clients do with, like private
equity investments.
That'd be like go talk to Dave,my advisor, and he'll vet it,
and then I get to say no and bethe bad guy, so that you don't
have to go tell your high schoolfriend you're not gonna give
them $800,000 to invest in theirstartup.
Speaker 2 (16:33):
Now, when do you're wearing a black shirt?
Speaker 1 (16:36):
All you need to know is the black hat.
Well, chris, I wanna talk about.
So once a family decides thatcharity is important and they
wanna build this strategic plan,they start to put in writing
their values as a family, theirmission statement.
The other thing that we've seento be really important is like
(16:58):
how and when to start, eveninvolving children, because at
the end of the day, some ofthese children might grow up in
a more privileged lifestyle.
Obviously, being mom and dadhave wealth and if you're giving
it all away, you want them tonot have some animosity towards
(17:18):
you giving their futureinheritance away.
You want them to be proactive,productive members of this
charitable intent.
And I just wanna throw kind ofthree things out that I've seen
and talked to clients about inany experiences you have here,
chris, but like kind of breakingit down into the most relevant
developmental years, because atthe end of the day, if you're in
(17:40):
your 60s or 70s and have a 40year old child who's just a
loser I don't know there'sprobably not a ton we can do for
you at that point.
But in their core developmentaldays, like when they're kind of
toddlers or in that preschoolage, I think the most impactful
thing is just letting them seeyou, letting them observe you
helping construct that mindsetor ideal around, like maybe
(18:02):
donating some of their toys ortheir clothes to people who
don't have nearly as much asmaybe they do.
But then when they start to getinto that school age, we wrote a
book with a lady named TishRaib who is she wrote a lot of
Dr Zeus's books once Dr Zeuspassed away we did this on the
bucket plan but we kind ofmorphed it into three buckets a
(18:24):
spend bucket, a save bucket anda give bucket and so kind of
sharing that with school agekids.
And again, if you'veestablished something like a
family donor advised fund,something that we talk about
with our clients is maybesitting around the dinner table
talking and empowering the kidsto research charities and they
(18:46):
could tap into that family'sdonor advice fund and make
grants to the charities thatthey've done research on or
maybe they're participating in.
And I think that goes all theway into high school or college
age really having them getinvolved with those charities
that you're participating in orthat they might participate in,
or even establishing a givingaccount for them so that it's
(19:09):
kind of built or ingrained intotheir lifestyle.
But is there anything you'veseen of involving the children?
Speaker 2 (19:15):
Well, I want to comment on that and why I hardly
endorse it, for two reasons.
The first value I think you'reteaching is your resources, your
wealth.
It's to be treated with respectand diligence.
(19:36):
And I think the other greatthing is it is going to be a
window to what the real world isto your children, in that
they're going to see suffering,they're going to see deprivation
, they're going to seedysfunction, and that's sort of
a controlled environment forthem to begin to see it and they
can begin to ask themselves howdoes this come to be?
(19:57):
What can we do to amelioratesome of this?
I think that's very importantand I agree with what you said
about the 40 year old.
If you haven't successfullylaunched, so to speak, by 40,
not much I hate to write peopleoff at such a relatively young
(20:19):
age, given that I'm now 67, butthat's probably not much you can
do.
The other thing aboutphilanthropy it's not going to
if your family's, at its core,dysfunctional, I'm not sure it's
going to make it fullyfunctional, but it might make it
less dysfunctional.
So that for those that havereally great resources getting
(20:40):
the adult children involved inmaybe having them on the
investment committee of thefamily's investments.
Maybe they're not voting, butthey get to see the process,
they get to hear the experts,they get to understand there's a
way how money is deployed andhow it's evaluated.
Speaker 1 (21:00):
Well, and Chris I want to kind of touch on because
I think that's such a greatsegue of kind of number one is
making a plan, your values, yourfamily mission statement, your
budget around this.
I think number two is the rolesand responsibility, and so this
goes into who's going toparticipate in this with you.
How are decisions going to bemade, how often are you going to
(21:24):
meet on this topic?
And then what's everyone's rolein this?
Like, maybe somebody's reallyinvolved in networking, maybe
another person in your family oron your team is really good at
analyzing, maybe somebody's morethe visionary, maybe that's you
, if it's your wealth of whatyou want the impact of this to
be.
But I think kind of writing outthose roles and
(21:45):
responsibilities.
Again I go back to building acompany.
If you were going to build acompany, you're going to have
all of those roles andresponsibilities.
So maybe the participants arechildren, maybe they're
immediate family members, maybethey're extended family members,
maybe it's somebody like us atAlastair.
(22:05):
Financial Advisor, your taxadvisor, there's attorneys who
specialize in helping incharitable giving.
But again, writing those rulesof engagement out who's going to
participate, how will decisionsbe made, how often are you
going to meet Brings me kind ofinto that idea of a family
meeting, having an agendaestablishing a location,
(22:29):
determining what activitiesyou're going to participate in.
I think all of those are soimportant, chris.
Any thoughts on that?
Speaker 2 (22:36):
You're hitting all the nails on the head.
What I think I could add isalso the dreaded S-word and the
dreaded S-word, it's a politeword succession.
You have a business.
Every business that's well runhas a succession plan in case
some disaster happens.
And when you have the teenagers, the younger adults, involved
(23:03):
in the investing and seeing theprocess of how advisors are
advisors not just financial, butlegal and accounting, it people
, you know, if you've got afamily office, you're in effect
you as the oldest generation.
You're doing the on-the-jobtraining of them.
So when the time comes, when theoldest generation may feel the
(23:27):
time is ready to increase theinvolvement of the younger
people and that's sending amessage to the next younger
generation they've got to do thesame for their children.
So if you're really talkingabout a dynastic tradition of
giving, you're really doing allthe hard work upfront, because I
(23:50):
think it's hard.
I think it's hard where youhaven't given much thought to
succession.
The older generation's tryingto cling for whatever their
motivations, they're notinvolving the kids as much.
I think they regret that.
I haven't people I've knownover the years.
I think their biggest regret isthey didn't involve their
(24:11):
children earlier.
They regret later.
Speaker 1 (24:14):
I want to kind of wrap up this episode with two.
One is you know how, and I wantto briefly talk about the how.
But before I do that, chris,I'd love like your personal
perspective, because I know youknow over your lifetime you've
gone from where you're justgiving money right, giving
resources to you and your wifealso are participants, like you,
(24:37):
I believe.
Are you still on MIT's brainresearch?
Speaker 2 (24:41):
Yes, we are.
We're still being remindedregularly of fully achieving our
philanthropic potential, butwe're doing great.
You know my wife and I don'thave children.
In the end They'll getsomething very nice seven
figures easily, but you knowwe're doing a great job.
Now we are my wife's 40thanniversary of graduating.
(25:02):
I wanted to endow a researchfund for psychiatric illnesses.
My wife was a medical doctor,psychiatrist.
When I was first able to dosomething that was bigger than
writing a check, I endowed ascholarship at the Jesuit Prep
School.
My parents wanted me to attend,and that was one where I
(25:24):
definitely regretted I didn't doit sooner, though my mother got
to see it in action for nearlynine years before she passed
away.
So I'm more focused on what Iwant to do.
There's some others that my lawschool, where I've taught since
2009 and created a course incharitable giving and wealth
(25:45):
management, and then, when anaming opportunity became
available it was actually aclassroom that I've taught many
times when that became available, I said the heavens were
aligned, I'm going to do it.
It was maybe sooner than Iwanted to do it, but I decided
it's available and sometimes youjust give.
And the other thing that Ithink could be relevant to your
(26:09):
clients is.
I'm a big believer in not onlyproactive philanthropy but
preemptive philanthropy.
If you're capable of a lot, theword does filter out, despite
your best efforts to not have aLinkedIn profile or not having a
social media account is thecase with me.
(26:30):
But they, you know people dotend to.
They have good research.
They, you know they can findout, find out.
But I'd like to identify thingsof interest to me or my wife
and decide to fund them.
You can always say no.
I always find, if you're beingsolicited, the best thing to do
is just literally bite yourtongue and then wait for the
fundraiser to say something,because they're they will
(26:53):
probably break before you do and, as Dave knows, as my
background as a lawyer, I'm justway too accustomed to saying no
to a lot of ideas.
Speaker 1 (27:02):
So here's what I want to end the episode with, and
this has been great, chris.
I mean again like I think mybiggest takeaway from this, even
thinking about myself and how Icould adapt this into my family
is, you know, number one, goingback and kind of outlining what
my own core values and kind ofthat family mission statement,
and you know who and how.
(27:23):
Of course, as you know, chris,I have a seven year old.
She's starting to understandmore and more of this.
I have a five year old and thenthe two year old, but you know,
it's not like, not like they'rethey're heavily involved in the
decision making process rightnow.
Speaker 2 (27:38):
But it's good.
They know there's a worldoutside of everything that they
want.
And you know I was chuckling tomyself when you were telling
about giving away the toys.
You know, as a kid I definitelyhad way more toys than I had
and one day I came back fromschool in like third grade, you
know, found out my mother andfather had given away half the
(28:01):
toys away to the Salvation Army.
That was not one of my shiningmoments, I'll just say that.
But hey, I'm a kid.
Speaker 1 (28:09):
Sixty something years later, it's still in your head.
You might need to talk to yourwife about this, oh, I have that
is your doctor.
Speaker 2 (28:18):
Oh, I have.
Well, I'm like I'm the world'slargest, longest continuing
research and observation projectin psychiatry, since I'm
married to one.
Speaker 1 (28:29):
Well, here's what I want to kind of land the
airplane with in this episode.
So, as we're thinking aboutgiving there's these elevated
areas on a technical side, andDavid, I know this is what I
messaged David today, saying ifyou want to come on, go ahead.
If you want to duck out me andChris could handle this episode.
And he said anytime I get totalk about taxes, I'm in, yeah.
I love it, so it's great For aclient.
(28:52):
Of course, giving outright cashis absolutely okay and there's
some limitations on how much youcan deduct in any given year
and if you're not itemizing yourtaxes, your deductions, you're
probably not getting a taxbenefit for that Correct.
The second level and what wegenerally would advise is if
(29:14):
you're going to give somebody orsomething money, give them
highly appreciated investments,non-retirement stuff, because
again you paid a low amount butyou get the tax deduction, as
Chris said, based on whateverthe current market value is.
And now there's also anotherlimitation for how much you can
deduct of that type of giving inany given year and it goes on
(29:36):
your itemized deductions again.
Speaker 2 (29:40):
Yeah, that you know.
When you're giving appreciatedproperty, generally the
limitation is 30% of youradjusted gross income.
If you're giving cash, it's 60%of adjusted gross income.
And both those cases wereassuming you're giving directly
to a publicly supported charity,and that's not hard to find out
(30:02):
.
I mean you just ask the charityfor their tax exempt letter or
if you're a more trust butverified type of person, like I
am, you'll take the letter, butyou'll also look at Publication
78 to see if they're listedamong the tax exempt
organizations.
Publication 78 is online.
Speaker 1 (30:21):
So the third level then is maybe you need the tax
deductions today, but you wantto be able to dole that money
out into the future, over thenext whatever one, three, five,
10, 15, 20, as long as you'realive.
That's where a donor advicefund it's basically just an
investment account we could openthat Schwab or at Fidelity.
(30:44):
You could make the gift and putthe assets in and get the full
tax deduction, but then youcould make grants in the future
from that donor advice fund.
So it's like creating your ownfamily charitable fund for you
to give from in the future.
Speaker 2 (31:01):
Yeah, and if you like having the name foundation, you
know the donor advice fundstill, you know, call it the
Whirly Family Foundation ifthat's what really excites you.
And the thing that I think is agreat positive about the donor
advice fund one you have a right.
You, as the donor, you have theright of recommendation and you
(31:25):
know, theoretically yourrecommendation could be turned
down by the donor advice fund.
But that realistically is notgoing to happen in unless you're
requesting recommendations tocharities that are on the
terrorist watch list.
So that's not, that's not good,you're not going to do that.
And the other good thing is, ifyou have a donor advice fund,
(31:47):
you will be able to maintain therelationship with the
investment advisor.
So if you've got a reallylonger term strategy for growing
the donor advice fund and youwant more equity, you know
equity, alternative investments,whatever you have the right of
recommendation.
So that again, that is afantastic way of continuing
(32:11):
relationship with your advisor.
I hope the audience has seenhow just interlinked just the
investing is with the giving ofgifts.
For some people starting out, Ithink they think there's a
bifurcation of the two, but it'simportant to have very good
investment counsel to whatyou're doing.
Speaker 1 (32:31):
So those are kind of the three ways I would say that
the 95% are going to use to give.
Then there's much more advancedthings like setting up your own
foundation, and I think there'sa lot of misconception.
We could do a whole podcastepisode on this.
We're not going to get into ithere.
But, chris, what's like, what'syour kind of dollar limit?
(32:53):
If somebody was going to say,chris, should I set up my own
private foundation?
Speaker 2 (32:58):
Well, first I'll try to raise some Ugly questions
that may be lurking in the backof a parent's mind.
If your adult son or daughteris really Unemployable, the
foundation will not be Probablya good vehicle to pay him or her
a high six-figure salary,because the compensation has to
(33:19):
be reasonable.
You're going to really have tohave an outside compensation
study.
So for a foundation that mayjust have several million
dollars in it, you're not reallygoing to be paying your
children more than I'm picking asomewhat arbitrary number, but
a hundred thousand dollars.
The other thing to keep in mindabout People who think they
(33:42):
want to have a privatefoundation you will need to run
the business and be likeCaesar's wife.
You're going to have to beabove all of our approach.
Why?
Because the documents you'regoing to file for the private
foundation the 990 are documentsof public record and Every
three or four years, every youknow major Organization like a
(34:06):
pro-publica.
You know they'll study them,they have time, they're looking
for ideas and they'll chroniclesome abuse about excessive pay
or excessive travel.
So assume everything you do isgoing to is being looked at and
and and.
If you're someone who walks thestraight and narrow, you have
nothing to hide.
But to go back to your question, you know is there and not you
(34:27):
know what sort of the rockbottom number.
If you talk to lawyers, youknow in New York or out in
Silicon Valley they may say tenmillion.
If you talk to Lawyers andinvestment advisors outside of
those areas, you know somethingless than ten, maybe two million
, maybe five million.
It is a lot of paperwork andDespite your client, the donor's
(34:53):
best intentions about oh I, oh,I look at, look, professor,
world hits paperwork.
I can complete these.
You know 110 line forms.
Well, you know what is it?
The?
The Spirit is willing, but theflesh is weak.
It's.
Speaker 1 (35:11):
It's a lot of hard work to really understand what
the forms mean, but if you wantto do it, do it so really it
adds risk and complexity andrisk, risk and complex and
Disappointment and the lastthing is the charitable trust,
because there's a charitableremainder trust, which is a
split interest trust, and when Isay split interest, it means
(35:34):
you or your estate gets some ofthe benefit and the charity gets
some of the benefit.
Speaker 2 (35:39):
Yeah, I think for clients that you know are in a
position to consider some reallyMeaningful philanthropy, you
want to look at the charitablelead trust, that that's an
arrangement where the front endthe payments they're going to
charities that you can directand then the remainder interest
goes can go back to you as theEstablishers, the grand tour and
(36:01):
you get an income tax deduction.
Or it could go to your children.
Sometimes you'll see in thelead trust described as a
deferred inheritance trust,meaning your kids are going to
get it and what can be fantasticabout it is, let's say, you put
a million in a CLT and at thetime your children get it it's
(36:23):
worth five million.
That four million dollars isnot subject to gift tax and On
the front end you can devise thepayout rate so that that
million dollars you put in it'snot even subject to gift tax
itself, so you don't have to useany of your Current exemption.
So that's very powerful and sothe.
Speaker 1 (36:45):
With all of these techniques, you know there's
complexity to think throughwhich one's right for you.
There's huge tax benefits to doit right, but at the end of the
day, the tax should not dictatethe decision.
Right it?
If you give money away tocharity, you're giving it a rate
of a hundred percent, you know,and so the tax rates only 40 or
50 percent.
(37:05):
You know the the charitablegift is always going to be
bigger than the tax rate itself,and so you know this is for.
I think anybody who's made itthis long in the podcast I'm
sure you're not doing this justlooking for that next tax dodge
on YouTube or Facebook reels.
This is legitimate stuff tobring value to the charities.
But, yes, there are nice taxbenefits along the way that
(37:29):
you'll also achieve.
Speaker 2 (37:31):
Yeah, I, you know, I think, to end with this idea of
donor motivation, you know a lotof philanthropists are what
I'll call for payers.
They're very grateful for theeducation they receive, they're
very grateful for the healthcare they receive, they're very
grateful for the religiousinstruction they received.
(37:52):
So they're, they're big drivers.
And then I think there areothers that just think it's the
right thing to do.
And then there are others whobelieve in an afterlife where
you're gonna, there's gonna bean accounting at the end of days
of your time, talent andtreasure.
You know they want to make surethey're racking up enough
Tangible evidence of the goodthat they're doing and that they
(38:13):
have been a good steward ofwhat they've received.
Speaker 1 (38:17):
Fantastic.
Well, this was a great, chris.
I appreciate you jumping onyour.
Speaker 2 (38:22):
Experience and wisdom with us here and look forward
to seeing you soon well and but,and you can edit this out at
the end, some saving it at theend.
But you have my great Respectand admiration.
You know so much of the taxcode off the top of your head
and the amazing thing to me is,unlike a lot of lawyers, you can
(38:42):
explain it in a way that makesgreat sense.
And you know I feel veryprivileged to be able to work
with you on the tax managementjourney.
We do have a lot of fun.
I mean I never could understandwhy people think taxes is
boring.
I mean it's like just I nevercan get my head around.
Speaker 4 (39:00):
I'm with you on that one.
Speaker 1 (39:02):
Very good, all right guys?
Well, have a great week andI'll see.
Speaker 3 (39:05):
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advisor with its principal placeof business in the state of
Ohio.
Allison wealth management andPCA are separate, not affiliated
, entities.
Pca does not provide tax orlegal advice.
Insurance and tax servicesoffered to Allison wealth
(39:25):
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Information received from thisvideo should not be viewed as
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Content may have been createdby a third party and was not
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please contact the firm or referto the investment advisor
(39:48):
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invest or send money.
Welcome everybody, and we've got a great episode
here at the Complete WealthManagement podcast.
I've got a very amazingcolleague and friend, somebody
I've had the opportunity to getto know over the last.
What's it been, chris?
Now over four years I thinkwe've been oh, my, oh, my God
going around the countrytogether In 2019, we started.
Chris, give us a little bit ofbackground on your kind of
(00:33):
professional side of thingsbefore we get into some of also
the episode topic today, whichis charity and philanthropy and
something that I know you're anabsolute expert in.
Speaker 2 (00:45):
Thank you, Well, I've had really three distinct
careers.
I'm trained as a lawyer, I havean LLM in tax.
The first third of my career Iwas a business and estate
planning lawyer, representingusually sellers of companies,
and also led along the way tophilanthropy.
And I got recruited to become adirector of plan giving at an
(01:10):
R1 university, worked my way upto the number two, then later
became the head of plan givingat an Ivy League Medical Center,
the Princeton Health CareSystem Foundation, and then my
third career has been in quoteacademe or practical academe.
I held an endowed chair at theAmerican College, then in Brydon
(01:34):
Marr, now in King of Prussia,and then I later headed the
advanced designation departmentat the college for financial
planning out in Colorado.
And along the way, since I sawa lot of good habits and
practices of the people I workedwith, I became in a position to
give away money myself and, asI mentioned to you offline, it's
(01:58):
now official I in the society,the Ruslan society, at the law
school at Villanova, and I guessI can say philanthropy first
and last.
Refuge of the scoundrel.
I'll let the audience as welisten determine whether I'm the
first or the last, but ifyou're, if you're in a position
(02:19):
to give.
I think it's very important youdo.
Speaker 1 (02:24):
Certainly by way of technical background.
You know, chris there's there'snot too many in the United
States that I think you knowknow as much as you know
technically about the topic thatwe're going to talk about with
your background and training.
And then it certainly soundslike you've convinced a lot of
people to give a lot of moneyaway over your career, including
yourself.
Speaker 2 (02:43):
Yeah, I think that's fair.
Some of the people that Iworked with had great resources
and there's an IM pay designedbuilding at Drexel University
that I was involved with.
There's a college named Drexelafter a very prominent wealthy
family, so it's wonderful to doit.
(03:04):
But you know what struck meabout both of those situations?
Although there was, you know, afinancial element to when they
gave and how they gave, theyreally had to come to a core
question why do I want to dothis?
And that might be, you know, agood jumping off point for any
(03:26):
client who, by being in theright place at the right time,
getting sound counsel from yourfirm gave and your knowledge of
taxes, decide okay, I know Ihave more than I probably can
ever spend.
I think I have more than mykids can probably ever spend, so
I want to start withphilanthropy, but I really don't
(03:48):
know how.
Speaker 1 (03:49):
Yeah, that's a great topic and I think in this
episode what we'll do is we 'llprogressively up the ante all
the way to the point where youcan get a university named after
you.
But let's kind of talk, youknow, on a smaller scale.
First, because we have a lot ofclients at Allison Wealth that,
to your point, they have areally great income.
(04:12):
They've even started toaccumulate some substantial
assets and they've realized,like they have enough for
themselves.
Or, quite frankly, even some ofthe clients that are still
accumulating, they have such anincome and they have causes that
they care about that they wantto carve out a portion of the
income and be able toparticipate in different
(04:34):
charitable efforts.
And so, you know, one of thethings that I've really seen is
that so many clients participatein what I would call checkbook
philanthropy instead ofstrategic philanthropy, and what
I want you to do is share someinsight into, kind of how to be
a little bit more strategic andgive some of our clients things
(04:56):
that they can think about, basedon your personal experiences.
But what I mean by checkbookphilanthropy first is that you
know there's I know I'm guiltyof this at times like causes
will come to me and say hey Dave, can you contribute to this?
Or I go attend a fundraiser andyou know I like the cause and I
write a small check and itmight be a hundred bucks, it
(05:17):
might be 500 bucks, it might be1000 bucks, but there's not a
lot of strategy to it.
It's very reactive, it's notproactive, it's not like us
sitting down as a family andthinking about what our core
values are and what our missionstatement is.
It's just, you know, I'm at anevent and somebody's trying to
do a fundraiser, and so you knowthere's there's nothing wrong
(05:39):
with that by any means.
For everybody who's doing thingslike that, I think it's a great
way for you know thesedifferent charitable entities to
be able to raise some money.
And David Roth is on here withus.
Hey, david, good to see you,good to see you both.
So you know, and we know, aswe're talking with clients about
this, there's certainly sometax benefits that you can kind
(06:00):
of parlay in with your givingeffort.
Now, you know, for those of youwho are taking the standard
deduction, you know there's somethings to think about in terms
of if you're actually getting atax break for giving to these
charities and how you're givingif you're itemizing your
deductions.
There certainly could be someother tax breaks, but there's
(06:22):
also, like all these differentvehicles, that we could use,
right, chris?
Speaker 2 (06:27):
Oh, absolutely.
And I I'd like to combine whatI call one of the Mount Rushmore
tax deductions and that is thegift of appreciated property,
whether you give it directly tothe charity or in a minute we'll
talk about donor advised funds.
But why do I have it on myMount Rushmore of most important
tax deductions?
Well, think about it.
(06:48):
Can you think of any provisionin the code and I know both of
you are very versed in the codewhere you legally can get a
deduction in an amount greaterthan what you paid for?
You know you bought your Googleat a thousand.
It's now worth many multiplesof that.
You get the deduction out themany multiples over what you
(07:09):
paid for.
That's extraordinary.
And it's not even a taxpreference item for the AMT.
So that that's wonderful.
And then to the situation wherea lot of clients may be in
where they really don't get abenefit of itemizing because the
standard deduction is so highright now.
A very good technique is to, ineffect, bunch all your future
(07:30):
contributions and put it in adonor advised fund.
So maybe you have you give fiveyears worth of contributions to
the DAF.
That's a public charity.
You get the most favorablededuction amounts like it's a
war, public charity and you canparcel out the money as the need
arises so you can makethoughtful decisions.
(07:53):
So to go back to your question,like everyone's asking you for
money, you're invited to all theevents, black tie or otherwise,
and, uh, you feel compelled togive.
When you've got in effect yourcharitable piggy bank, I think
you can say, okay, I've got tobe more thoughtful of this.
And you can say that's what thebudget is.
(08:14):
I'm not comfortable politelyturning down requests for
support and, depending on yourresources or inclinations, you
might adopt what I'll call the$1,000 test, and that is is this
a charity?
I think merit's $1,000.
If not, maybe you're justgiving something because you
don't like turning people down.
(08:35):
You were invited to the event,but is it a $1,000 charity?
In your mind it may be.
You may not know enough to sayit isn't, but that gets you a
little more disciplined aboutwhy am I doing this?
And there's been a study ofphilanthropists and one of them
is the seven faces ofphilanthropy.
(08:56):
And one of the faces ofphilanthropy is I'll put it in
polite terms you're a marketerof yourself, or the cruder term
is your self promoter.
So you're giving verystrategically so that you are
known in your community as oneof the go-to people, one of the
reliable people to be supportingthe charities, and there's,
(09:20):
frankly, nothing wrong in that.
Speaker 4 (09:21):
But it's good to acknowledge to yourself while
you're doing that yeah, and onething I would say that it's like
kind of a light bulb thatclicked with me when we're
talking about this wholecharitable giving and what to do
.
And maybe, chris, you canexpand on this a little bit more
.
Dave, you were saying that youhave that checkbook mentality of
doing it, where you're writinga check, but I think what I've
seen is, when you plan this out,two things happen.
(09:43):
One, you can be moreintentional about where your
money goes and two, you couldactually give more money.
I mean, that was a big clickingpoint for me is that if you are
smart about this, you canactually give more to these
charities than you would have ifyou just did it in a
half-passard way.
So you get to be moreintentional and you might have
more that's going to net to them.
Speaker 2 (10:01):
Yeah, and I think the value of that too is every
organization, from the mostresource to the least resource.
They have to prioritize whothey're going to spend time with
and if you're already giving ata good level, you're going to
be identified as someone forgreater involvement.
And there are donors who wouldlike that.
(10:23):
They would like to see the nutsand the bolts of how a charity
goes about with their literacyprograms or feed the poor
programs or whatever.
And then there are others.
It's like very interesting,it's wonderful.
I have so many demands on mytime, I can't do it, but maybe
(10:46):
your spouse or your adultchildren can be involved.
So that's one of the advantagesof being able to be a reliable
and generous contributor.
You're going to be given theopportunity to know these
organizations at a deeper level,because that's good business on
their end, because there's asense in the general public that
(11:09):
charities they're not forprofit and they're these
well-intentioned do-gooders whoaren't really running a business
.
But that's not true.
And the irony is and I'veobserved this over my working
career the organizations thatarguably least need the money
(11:29):
and I won't name names, but theyhave the easiest time getting
it because in part, they knowthere's no question, the
organization is going to bearound.
There's no question, or modestquestions, that it's well run
and reasonably efficient.
So there's a certain Darwiniansurvival of the fittest with the
(11:51):
solicitation of funds as to whoreally gets them.
Speaker 1 (11:55):
So what I'm really kind of hearing and thinking
about how to think about yourown strategic charitable giving
foundation, if you will is and Idon't mean set up a charitable
foundation, I mean thefoundation of your household is
the first thing you need to dois make a plan, and the three
things that I've seen and, chris, I'd love to hear your insight
into these is number one sittingdown and mapping out what your
(12:21):
family's core values are.
I know running a business thishas been incredibly helpful in
the businesses that I've hadthat are establishing with the
core values of the business, howwe hire, how we reward, how we
retain, how we promote thetalent.
Right and I think, for a familyto establish what those core
(12:41):
values are.
And then setting up andestablishing some sort of family
mission statement and then, toDavid's point, a corresponding
budget of what your goals are.
Do you have annual giving goals?
I just met with a client morerecently.
They want to be able to give ahuge amount of money each year,
not just wait till they're deadto give the money.
(13:03):
Other clients it's more modestfive, 10, 15,000 dollars a year.
But, chris, kind of talk aboutthose components of actually
making a plan.
Speaker 2 (13:12):
Yeah, you've alluded to it, what I'll call a
charitable mission statement,and the goal is, with the
mission statement, first toreach a resolution and put it
down on paper.
There's something powerful,reducing all your thoughts and
feelings to writing, because itstares back at you and when you
(13:33):
see it staring back at you, youmay not quite agree as much as
you thought or you realize theneed to make adjustments.
So you're trying to figure outwhat do you care about most and
maybe, as an addendum, is thereanything you're hoping to change
?
Are you trying to providegreater access to education,
(13:55):
greater access to what I'll callfood security?
Those are great things.
Also, it's the chance to take aninventory of what you're
already giving to and askingyourself, going back to your
earlier statements like why am Idoing this?
I mean, they asked me for money.
I don't want to turn them down,but why am I really doing this?
(14:16):
So values, causes and then thelast thing that I think people
in the end come to answeringthis question the region or
where, no matter how manymillions, hundreds of millions,
billions money will not solvethe problem in full.
I think it can ameliorate a lotof the worst parts of any
(14:39):
problem, but want to see where Ican do the most good.
The other advantage of doingthat, by the way, is not only
focusing your philanthropy, it'sgoing to eliminate a lot of
unnecessary requests fromoutside your jurisdiction.
That in and of itself, is agood thing.
Speaker 1 (15:00):
Well, I think that's such a great screen is because
sometimes you know, especiallyif you've amassed a lot of money
and start giving it away, I'msure there's no shortage of
people who are gonna be reachingout and calling you to try to
get more and more.
And by having your core valuesand your family mission
statement documented, it givesyou a great screen of not
(15:22):
necessarily what to say yes to,but, more importantly, what to
say no to.
Speaker 2 (15:27):
Yeah, I think that a common observation all here of
people who can give a lot is Ihad no idea there were so many
charities and they're justtalking about their relatively
small geographic jurisdiction.
So I think that's important.
And I think the other thingabout having a systemized way of
(15:51):
giving it doesn't have to bethrough a foundation, but if it
is through a foundation, atleast you can say, okay, if it
meets the guidelines, you maysubmit a formal request.
But I alone am not the decider.
It's gotta go through a process.
So, of course, if the result isnot good at the end you can
(16:13):
blame the other members on thecommittee and keep your good
standing.
Speaker 1 (16:18):
What a lot of our clients do with, like private
equity investments.
That'd be like go talk to Dave,my advisor, and he'll vet it,
and then I get to say no and bethe bad guy, so that you don't
have to go tell your high schoolfriend you're not gonna give
them $800,000 to invest in theirstartup.
Speaker 2 (16:33):
Now, when do you're wearing a black shirt?
Speaker 1 (16:36):
All you need to know is the black hat.
Well, chris, I wanna talk about.
So once a family decides thatcharity is important and they
wanna build this strategic plan,they start to put in writing
their values as a family, theirmission statement.
The other thing that we've seento be really important is like
(16:58):
how and when to start, eveninvolving children, because at
the end of the day, some ofthese children might grow up in
a more privileged lifestyle.
Obviously, being mom and dadhave wealth and if you're giving
it all away, you want them tonot have some animosity towards
(17:18):
you giving their futureinheritance away.
You want them to be proactive,productive members of this
charitable intent.
And I just wanna throw kind ofthree things out that I've seen
and talked to clients about inany experiences you have here,
chris, but like kind of breakingit down into the most relevant
developmental years, because atthe end of the day, if you're in
(17:40):
your 60s or 70s and have a 40year old child who's just a
loser I don't know there'sprobably not a ton we can do for
you at that point.
But in their core developmentaldays, like when they're kind of
toddlers or in that preschoolage, I think the most impactful
thing is just letting them seeyou, letting them observe you
helping construct that mindsetor ideal around, like maybe
(18:02):
donating some of their toys ortheir clothes to people who
don't have nearly as much asmaybe they do.
But then when they start to getinto that school age, we wrote a
book with a lady named TishRaib who is she wrote a lot of
Dr Zeus's books once Dr Zeuspassed away we did this on the
bucket plan but we kind ofmorphed it into three buckets a
(18:24):
spend bucket, a save bucket anda give bucket and so kind of
sharing that with school agekids.
And again, if you'veestablished something like a
family donor advised fund,something that we talk about
with our clients is maybesitting around the dinner table
talking and empowering the kidsto research charities and they
(18:46):
could tap into that family'sdonor advice fund and make
grants to the charities thatthey've done research on or
maybe they're participating in.
And I think that goes all theway into high school or college
age really having them getinvolved with those charities
that you're participating in orthat they might participate in,
or even establishing a givingaccount for them so that it's
(19:09):
kind of built or ingrained intotheir lifestyle.
But is there anything you'veseen of involving the children?
Speaker 2 (19:15):
Well, I want to comment on that and why I hardly
endorse it, for two reasons.
The first value I think you'reteaching is your resources, your
wealth.
It's to be treated with respectand diligence.
(19:36):
And I think the other greatthing is it is going to be a
window to what the real world isto your children, in that
they're going to see suffering,they're going to see deprivation
, they're going to seedysfunction, and that's sort of
a controlled environment forthem to begin to see it and they
can begin to ask themselves howdoes this come to be?
(19:57):
What can we do to amelioratesome of this?
I think that's very importantand I agree with what you said
about the 40 year old.
If you haven't successfullylaunched, so to speak, by 40,
not much I hate to write peopleoff at such a relatively young
(20:19):
age, given that I'm now 67, butthat's probably not much you can
do.
The other thing aboutphilanthropy it's not going to
if your family's, at its core,dysfunctional, I'm not sure it's
going to make it fullyfunctional, but it might make it
less dysfunctional.
So that for those that havereally great resources getting
(20:40):
the adult children involved inmaybe having them on the
investment committee of thefamily's investments.
Maybe they're not voting, butthey get to see the process,
they get to hear the experts,they get to understand there's a
way how money is deployed andhow it's evaluated.
Speaker 1 (21:00):
Well, and Chris I want to kind of touch on because
I think that's such a greatsegue of kind of number one is
making a plan, your values, yourfamily mission statement, your
budget around this.
I think number two is the rolesand responsibility, and so this
goes into who's going toparticipate in this with you.
How are decisions going to bemade, how often are you going to
(21:24):
meet on this topic?
And then what's everyone's rolein this?
Like, maybe somebody's reallyinvolved in networking, maybe
another person in your family oron your team is really good at
analyzing, maybe somebody's morethe visionary, maybe that's you
, if it's your wealth of whatyou want the impact of this to
be.
But I think kind of writing outthose roles and
(21:45):
responsibilities.
Again I go back to building acompany.
If you were going to build acompany, you're going to have
all of those roles andresponsibilities.
So maybe the participants arechildren, maybe they're
immediate family members, maybethey're extended family members,
maybe it's somebody like us atAlastair.
(22:05):
Financial Advisor, your taxadvisor, there's attorneys who
specialize in helping incharitable giving.
But again, writing those rulesof engagement out who's going to
participate, how will decisionsbe made, how often are you
going to meet Brings me kind ofinto that idea of a family
meeting, having an agendaestablishing a location,
(22:29):
determining what activitiesyou're going to participate in.
I think all of those are soimportant, chris.
Any thoughts on that?
Speaker 2 (22:36):
You're hitting all the nails on the head.
What I think I could add isalso the dreaded S-word and the
dreaded S-word, it's a politeword succession.
You have a business.
Every business that's well runhas a succession plan in case
some disaster happens.
And when you have the teenagers, the younger adults, involved
(23:03):
in the investing and seeing theprocess of how advisors are
advisors not just financial, butlegal and accounting, it people
, you know, if you've got afamily office, you're in effect
you as the oldest generation.
You're doing the on-the-jobtraining of them.
So when the time comes, when theoldest generation may feel the
(23:27):
time is ready to increase theinvolvement of the younger
people and that's sending amessage to the next younger
generation they've got to do thesame for their children.
So if you're really talkingabout a dynastic tradition of
giving, you're really doing allthe hard work upfront, because I
(23:50):
think it's hard.
I think it's hard where youhaven't given much thought to
succession.
The older generation's tryingto cling for whatever their
motivations, they're notinvolving the kids as much.
I think they regret that.
I haven't people I've knownover the years.
I think their biggest regret isthey didn't involve their
(24:11):
children earlier.
They regret later.
Speaker 1 (24:14):
I want to kind of wrap up this episode with two.
One is you know how, and I wantto briefly talk about the how.
But before I do that, chris,I'd love like your personal
perspective, because I know youknow over your lifetime you've
gone from where you're justgiving money right, giving
resources to you and your wifealso are participants, like you,
(24:37):
I believe.
Are you still on MIT's brainresearch?
Speaker 2 (24:41):
Yes, we are.
We're still being remindedregularly of fully achieving our
philanthropic potential, butwe're doing great.
You know my wife and I don'thave children.
In the end They'll getsomething very nice seven
figures easily, but you knowwe're doing a great job.
Now we are my wife's 40thanniversary of graduating.
(25:02):
I wanted to endow a researchfund for psychiatric illnesses.
My wife was a medical doctor,psychiatrist.
When I was first able to dosomething that was bigger than
writing a check, I endowed ascholarship at the Jesuit Prep
School.
My parents wanted me to attend,and that was one where I
(25:24):
definitely regretted I didn't doit sooner, though my mother got
to see it in action for nearlynine years before she passed
away.
So I'm more focused on what Iwant to do.
There's some others that my lawschool, where I've taught since
2009 and created a course incharitable giving and wealth
(25:45):
management, and then, when anaming opportunity became
available it was actually aclassroom that I've taught many
times when that became available, I said the heavens were
aligned, I'm going to do it.
It was maybe sooner than Iwanted to do it, but I decided
it's available and sometimes youjust give.
And the other thing that Ithink could be relevant to your
(26:09):
clients is.
I'm a big believer in not onlyproactive philanthropy but
preemptive philanthropy.
If you're capable of a lot, theword does filter out, despite
your best efforts to not have aLinkedIn profile or not having a
social media account is thecase with me.
(26:30):
But they, you know people dotend to.
They have good research.
They, you know they can findout, find out.
But I'd like to identify thingsof interest to me or my wife
and decide to fund them.
You can always say no.
I always find, if you're beingsolicited, the best thing to do
is just literally bite yourtongue and then wait for the
fundraiser to say something,because they're they will
(26:53):
probably break before you do and, as Dave knows, as my
background as a lawyer, I'm justway too accustomed to saying no
to a lot of ideas.
Speaker 1 (27:02):
So here's what I want to end the episode with, and
this has been great, chris.
I mean again like I think mybiggest takeaway from this, even
thinking about myself and how Icould adapt this into my family
is, you know, number one, goingback and kind of outlining what
my own core values and kind ofthat family mission statement,
and you know who and how.
(27:23):
Of course, as you know, chris,I have a seven year old.
She's starting to understandmore and more of this.
I have a five year old and thenthe two year old, but you know,
it's not like, not like they'rethey're heavily involved in the
decision making process rightnow.
Speaker 2 (27:38):
But it's good.
They know there's a worldoutside of everything that they
want.
And you know I was chuckling tomyself when you were telling
about giving away the toys.
You know, as a kid I definitelyhad way more toys than I had
and one day I came back fromschool in like third grade, you
know, found out my mother andfather had given away half the
(28:01):
toys away to the Salvation Army.
That was not one of my shiningmoments, I'll just say that.
But hey, I'm a kid.
Speaker 1 (28:09):
Sixty something years later, it's still in your head.
You might need to talk to yourwife about this, oh, I have that
is your doctor.
Speaker 2 (28:18):
Oh, I have.
Well, I'm like I'm the world'slargest, longest continuing
research and observation projectin psychiatry, since I'm
married to one.
Speaker 1 (28:29):
Well, here's what I want to kind of land the
airplane with in this episode.
So, as we're thinking aboutgiving there's these elevated
areas on a technical side, andDavid, I know this is what I
messaged David today, saying ifyou want to come on, go ahead.
If you want to duck out me andChris could handle this episode.
And he said anytime I get totalk about taxes, I'm in, yeah.
I love it, so it's great For aclient.
(28:52):
Of course, giving outright cashis absolutely okay and there's
some limitations on how much youcan deduct in any given year
and if you're not itemizing yourtaxes, your deductions, you're
probably not getting a taxbenefit for that Correct.
The second level and what wegenerally would advise is if
(29:14):
you're going to give somebody orsomething money, give them
highly appreciated investments,non-retirement stuff, because
again you paid a low amount butyou get the tax deduction, as
Chris said, based on whateverthe current market value is.
And now there's also anotherlimitation for how much you can
deduct of that type of giving inany given year and it goes on
(29:36):
your itemized deductions again.
Speaker 2 (29:40):
Yeah, that you know.
When you're giving appreciatedproperty, generally the
limitation is 30% of youradjusted gross income.
If you're giving cash, it's 60%of adjusted gross income.
And both those cases wereassuming you're giving directly
to a publicly supported charity,and that's not hard to find out
(30:02):
.
I mean you just ask the charityfor their tax exempt letter or
if you're a more trust butverified type of person, like I
am, you'll take the letter, butyou'll also look at Publication
78 to see if they're listedamong the tax exempt
organizations.
Publication 78 is online.
Speaker 1 (30:21):
So the third level then is maybe you need the tax
deductions today, but you wantto be able to dole that money
out into the future, over thenext whatever one, three, five,
10, 15, 20, as long as you'realive.
That's where a donor advicefund it's basically just an
investment account we could openthat Schwab or at Fidelity.
(30:44):
You could make the gift and putthe assets in and get the full
tax deduction, but then youcould make grants in the future
from that donor advice fund.
So it's like creating your ownfamily charitable fund for you
to give from in the future.
Speaker 2 (31:01):
Yeah, and if you like having the name foundation, you
know the donor advice fundstill, you know, call it the
Whirly Family Foundation ifthat's what really excites you.
And the thing that I think is agreat positive about the donor
advice fund one you have a right.
You, as the donor, you have theright of recommendation and you
(31:25):
know, theoretically yourrecommendation could be turned
down by the donor advice fund.
But that realistically is notgoing to happen in unless you're
requesting recommendations tocharities that are on the
terrorist watch list.
So that's not, that's not good,you're not going to do that.
And the other good thing is, ifyou have a donor advice fund,
(31:47):
you will be able to maintain therelationship with the
investment advisor.
So if you've got a reallylonger term strategy for growing
the donor advice fund and youwant more equity, you know
equity, alternative investments,whatever you have the right of
recommendation.
So that again, that is afantastic way of continuing
(32:11):
relationship with your advisor.
I hope the audience has seenhow just interlinked just the
investing is with the giving ofgifts.
For some people starting out, Ithink they think there's a
bifurcation of the two, but it'simportant to have very good
investment counsel to whatyou're doing.
Speaker 1 (32:31):
So those are kind of the three ways I would say that
the 95% are going to use to give.
Then there's much more advancedthings like setting up your own
foundation, and I think there'sa lot of misconception.
We could do a whole podcastepisode on this.
We're not going to get into ithere.
But, chris, what's like, what'syour kind of dollar limit?
(32:53):
If somebody was going to say,chris, should I set up my own
private foundation?
Speaker 2 (32:58):
Well, first I'll try to raise some Ugly questions
that may be lurking in the backof a parent's mind.
If your adult son or daughteris really Unemployable, the
foundation will not be Probablya good vehicle to pay him or her
a high six-figure salary,because the compensation has to
(33:19):
be reasonable.
You're going to really have tohave an outside compensation
study.
So for a foundation that mayjust have several million
dollars in it, you're not reallygoing to be paying your
children more than I'm picking asomewhat arbitrary number, but
a hundred thousand dollars.
The other thing to keep in mindabout People who think they
(33:42):
want to have a privatefoundation you will need to run
the business and be likeCaesar's wife.
You're going to have to beabove all of our approach.
Why?
Because the documents you'regoing to file for the private
foundation the 990 are documentsof public record and Every
three or four years, every youknow major Organization like a
(34:06):
pro-publica.
You know they'll study them,they have time, they're looking
for ideas and they'll chroniclesome abuse about excessive pay
or excessive travel.
So assume everything you do isgoing to is being looked at and
and and.
If you're someone who walks thestraight and narrow, you have
nothing to hide.
But to go back to your question, you know is there and not you
(34:27):
know what sort of the rockbottom number.
If you talk to lawyers, youknow in New York or out in
Silicon Valley they may say tenmillion.
If you talk to Lawyers andinvestment advisors outside of
those areas, you know somethingless than ten, maybe two million
, maybe five million.
It is a lot of paperwork andDespite your client, the donor's
(34:53):
best intentions about oh I, oh,I look at, look, professor,
world hits paperwork.
I can complete these.
You know 110 line forms.
Well, you know what is it?
The?
The Spirit is willing, but theflesh is weak.
It's.
Speaker 1 (35:11):
It's a lot of hard work to really understand what
the forms mean, but if you wantto do it, do it so really it
adds risk and complexity andrisk, risk and complex and
Disappointment and the lastthing is the charitable trust,
because there's a charitableremainder trust, which is a
split interest trust, and when Isay split interest, it means
(35:34):
you or your estate gets some ofthe benefit and the charity gets
some of the benefit.
Speaker 2 (35:39):
Yeah, I think for clients that you know are in a
position to consider some reallyMeaningful philanthropy, you
want to look at the charitablelead trust, that that's an
arrangement where the front endthe payments they're going to
charities that you can directand then the remainder interest
goes can go back to you as theEstablishers, the grand tour and
(36:01):
you get an income tax deduction.
Or it could go to your children.
Sometimes you'll see in thelead trust described as a
deferred inheritance trust,meaning your kids are going to
get it and what can be fantasticabout it is, let's say, you put
a million in a CLT and at thetime your children get it it's
(36:23):
worth five million.
That four million dollars isnot subject to gift tax and On
the front end you can devise thepayout rate so that that
million dollars you put in it'snot even subject to gift tax
itself, so you don't have to useany of your Current exemption.
So that's very powerful and sothe.
Speaker 1 (36:45):
With all of these techniques, you know there's
complexity to think throughwhich one's right for you.
There's huge tax benefits to doit right, but at the end of the
day, the tax should not dictatethe decision.
Right it?
If you give money away tocharity, you're giving it a rate
of a hundred percent, you know,and so the tax rates only 40 or
50 percent.
(37:05):
You know the the charitablegift is always going to be
bigger than the tax rate itself,and so you know this is for.
I think anybody who's made itthis long in the podcast I'm
sure you're not doing this justlooking for that next tax dodge
on YouTube or Facebook reels.
This is legitimate stuff tobring value to the charities.
But, yes, there are nice taxbenefits along the way that
(37:29):
you'll also achieve.
Speaker 2 (37:31):
Yeah, I, you know, I think, to end with this idea of
donor motivation, you know a lotof philanthropists are what
I'll call for payers.
They're very grateful for theeducation they receive, they're
very grateful for the healthcare they receive, they're very
grateful for the religiousinstruction they received.
(37:52):
So they're, they're big drivers.
And then I think there areothers that just think it's the
right thing to do.
And then there are others whobelieve in an afterlife where
you're gonna, there's gonna bean accounting at the end of days
of your time, talent andtreasure.
You know they want to make surethey're racking up enough
Tangible evidence of the goodthat they're doing and that they
(38:13):
have been a good steward ofwhat they've received.
Speaker 1 (38:17):
Fantastic.
Well, this was a great, chris.
I appreciate you jumping onyour.
Speaker 2 (38:22):
Experience and wisdom with us here and look forward
to seeing you soon well and but,and you can edit this out at
the end, some saving it at theend.
But you have my great Respectand admiration.
You know so much of the taxcode off the top of your head
and the amazing thing to me is,unlike a lot of lawyers, you can
(38:42):
explain it in a way that makesgreat sense.
And you know I feel veryprivileged to be able to work
with you on the tax managementjourney.
We do have a lot of fun.
I mean I never could understandwhy people think taxes is
boring.
I mean it's like just I nevercan get my head around.
Speaker 4 (39:00):
I'm with you on that one.
Speaker 1 (39:02):
Very good, all right guys?
Well, have a great week andI'll see.
Speaker 3 (39:05):
You see a advisory services are offered through
prosperity capital advisor, pcaand SEC registered investment
advisor with its principal placeof business in the state of
Ohio.
Allison wealth management andPCA are separate, not affiliated
, entities.
Pca does not provide tax orlegal advice.
Insurance and tax servicesoffered to Allison wealth
(39:25):
management are not affiliatedwith PCA.
Information received from thisvideo should not be viewed as
individual investment advice.
Content may have been createdby a third party and was not
written or created by a PCAaffiliated advisor and does not
represent the views and opinionsof PCA or its subsidiary.
For information pertaining tothe registration status of PCA,
please contact the firm or referto the investment advisor
(39:48):
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