Strategic Philanthropy: The Art of Meaningful Charitable Giving

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 no guarantee of future performance.

Transcript

Speaker 1: 0:10

Welcome everybody, and we've got a great episode here at the Complete Wealth Management podcast. I've got a very amazing colleague and friend, somebody I've had the opportunity to get to know over the last. What's it been, chris? Now over four years I think we've been oh, my, oh, my God going around the country together In 2019, we started.

Speaker 1: 0:30

Chris, give us a little bit of background on your kind of professional side of things before we get into some of also the episode topic today, which is charity and philanthropy and something that I know you're an absolute expert in.

Speaker 2: 0:45

Thank you, Well, I've had really three distinct careers. I'm trained as a lawyer, I have an LLM in tax. The first third of my career I was a business and estate planning lawyer, representing usually sellers of companies, and also led along the way to philanthropy. And I got recruited to become a director of plan giving at an R1 university, worked my way up to the number two, then later became the head of plan giving at an Ivy League Medical Center, the Princeton Health Care System Foundation, and then my third career has been in quote academe or practical academe.

Speaker 2: 1:29

I held an endowed chair at the American College, then in Brydon Marr, now in King of Prussia, and then I later headed the advanced designation department at the college for financial planning out in Colorado. And along the way, since I saw a lot of good habits and practices of the people I worked with, I became in a position to give away money myself and, as I mentioned to you offline, it's now official I in the society, the Ruslan society, at the law school at Villanova, and I guess I can say philanthropy first and last. Refuge of the scoundrel. I'll let the audience as we listen determine whether I'm the first or the last, but if you're, if you're in a position to give. I think it's very important you do.

Speaker 1: 2:24

Certainly by way of technical background. You know, chris there's there's not too many in the United States that I think you know know as much as you know technically about the topic that we're going to talk about with your background and training. And then it certainly sounds like you've convinced a lot of people to give a lot of money away over your career, including yourself.

Speaker 2: 2:43

Yeah, I think that's fair. Some of the people that I worked with had great resources and there's an IM pay designed building at Drexel University that I was involved with. There's a college named Drexel after a very prominent wealthy family, so it's wonderful to do it. But you know what struck me about both of those situations? Although there was, you know, a financial element to when they gave and how they gave, they really had to come to a core question why do I want to do this? And that might be, you know, a good jumping off point for any client who, by being in the right place at the right time, getting sound counsel from your firm gave and your knowledge of taxes, decide okay, I know I have more than I probably can ever spend. I think I have more than my kids can probably ever spend, so I want to start with philanthropy, but I really don't know how.

Speaker 1: 3:49

Yeah, that's a great topic and I think in this episode what we'll do is we 'll progressively up the ante all the way to the point where you can get a university named after you. But let's kind of talk, you know, on a smaller scale. First, because we have a lot of clients at Allison Wealth that, to your point, they have a really great income. They've even started to accumulate some substantial assets and they've realized, like they have enough for themselves. Or, quite frankly, even some of the clients that are still accumulating, they have such an income and they have causes that they care about that they want to carve out a portion of the income and be able to participate in different charitable efforts. And so, you know, one of the things that I've really seen is that so many clients participate in what I would call checkbook philanthropy instead of strategic philanthropy, and what I want you to do is share some insight into, kind of how to be a little bit more strategic and give some of our clients things that they can think about, based on your personal experiences. But what I mean by checkbook philanthropy first is that you know there's I know I'm guilty of this at times like causes will come to me and say hey Dave, can you contribute to this? Or I go attend a fundraiser and you know I like the cause and I write a small check and it might be a hundred bucks, it might be 500 bucks, it might be 1000 bucks, but there's not a lot of strategy to it. It's very reactive, it's not proactive, it's not like us sitting down as a family and thinking about what our core values are and what our mission statement is. It's just, you know, I'm at an event and somebody's trying to do a fundraiser, and so you know there's there's nothing wrong with that by any means.

Speaker 1: 5:41

For everybody who's doing things like that, I think it's a great way for you know these different charitable entities to be able to raise some money. And David Roth is on here with us. Hey, david, good to see you, good to see you both. So you know, and we know, as we're talking with clients about this, there's certainly some tax benefits that you can kind of parlay in with your giving effort. Now, you know, for those of you who are taking the standard deduction, you know there's some things to think about in terms of if you're actually getting a tax break for giving to these charities and how you're giving if you're itemizing your deductions. There certainly could be some other tax breaks, but there's also, like all these different vehicles, that we could use, right, chris?

Speaker 2: 6:27

Oh, absolutely. And I I'd like to combine what I call one of the Mount Rushmore tax deductions and that is the gift of appreciated property, whether you give it directly to the charity or in a minute we'll talk about donor advised funds. But why do I have it on my Mount Rushmore of most important tax deductions? Well, think about it. Can you think of any provision in the code and I know both of you are very versed in the code where you legally can get a deduction in an amount greater than what you paid for? You know you bought your Google at a thousand. It's now worth many multiples of that. You get the deduction out the many multiples over what you paid for. That's extraordinary. And it's not even a tax preference item for the AMT. So that that's wonderful. And then to the situation where a lot of clients may be in where they really don't get a benefit of itemizing because the standard deduction is so high right now.

Speaker 2: 7:26

A very good technique is to, in effect, bunch all your future contributions and put it in a donor advised fund. So maybe you have you give five years worth of contributions to the DAF. That's a public charity. You get the most favorable deduction amounts like it's a war, public charity and you can parcel out the money as the need arises so you can make thoughtful decisions. So to go back to your question, like everyone's asking you for money, you're invited to all the events, black tie or otherwise, and, uh, you feel compelled to give. When you've got in effect your charitable piggy bank, I think you can say, okay, I've got to be more thoughtful of this. And you can say that's what the budget is.

Speaker 2: 8:14

I'm not comfortable politely turning down requests for support and, depending on your resources 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 just giving something because you don't like turning people down. 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 say it isn't, but that gets you a little more disciplined about why am I doing this? And there's been a study of philanthropists and one of them is the seven faces of philanthropy. And one of the faces of philanthropy is I'll put it in polite terms you're a marketer of yourself, or the cruder term is your self promoter. So you're giving very strategically so that you are known in your community as one of the go-to people, one of the reliable people to be supporting the charities, and there's, frankly, nothing wrong in that.

Speaker 4: 9:21

But it's good to acknowledge to yourself while you're doing that yeah, and one thing I would say that it's like kind of a light bulb that clicked with me when we're talking about this whole charitable giving and what to do. And maybe, chris, you can expand on this a little bit more. Dave, you were saying that you have that checkbook mentality of doing it, where you're writing a check, but I think what I've seen is, when you plan this out, two things happen. One, you can be more intentional about where your money goes and two, you could actually give more money. I mean, that was a big clicking point for me is that if you are smart about this, you can actually give more to these charities than you would have if you just did it in a half-passard way. So you get to be more intentional 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 most resource to the least resource. They have to prioritize who they're going to spend time with and if you're already giving at a good level, you're going to be identified as someone for greater involvement. And there are donors who would like that. They would like to see the nuts and the bolts of how a charity goes about with their literacy programs or feed the poor programs or whatever. And then there are others. It's like very interesting, it's wonderful.

Speaker 2: 10:41

I have so many demands on my time, I can't do it, but maybe your spouse or your adult children can be involved. So that's one of the advantages of being able to be a reliable and generous contributor. You're going to be given the opportunity to know these organizations at a deeper level, because that's good business on their end, because there's a sense in the general public that charities they're not for profit and they're these well-intentioned do-gooders who aren't really running a business. But that's not true. And the irony is and I've observed this over my working career the organizations that arguably least need the money and I won't name names, but they have the easiest time getting it because in part, they know there's no question, the organization is going to be around. There's no question, or modest questions, that it's well run and reasonably efficient. So there's a certain Darwinian survival of the fittest with the solicitation of funds as to who really gets them.

Speaker 1: 11:55

So what I'm really kind of hearing and thinking about how to think about your own strategic charitable giving foundation, if you will is and I don't mean set up a charitable foundation, I mean the foundation of your household is the first thing you need to do is 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 sitting down and mapping out what your family's core values are. I know running a business this has been incredibly helpful in the businesses that I've had that are establishing with the core values of the business, how we hire, how we reward, how we retain, how we promote the talent. Right and I think, for a family to establish what those core values are. And then setting up and establishing some sort of family mission statement and then, to David's point, a corresponding budget of what your goals are. Do you have annual giving goals?

Speaker 1: 12:55

I just met with a client more recently. They want to be able to give a huge amount of money each year, not just wait till they're dead to give the money. Other clients it's more modest five, 10, 15,000 dollars a year. But, chris, kind of talk about those 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 to reach a resolution and put it down on paper. There's something powerful, reducing all your thoughts and feelings to writing, because it stares back at you and when you see it staring back at you, you may not quite agree as much as you thought or you realize the need to make adjustments. So you're trying to figure out what do you care about most and maybe, as an addendum, is there anything you're hoping to change? Are you trying to provide greater access to education, greater access to what I'll call food security? Those are great things.

Speaker 2: 14:02

Also, it's the chance to take an inventory of what you're already giving to and asking yourself, going back to your earlier statements like why am I doing this? I mean, they asked me for money. I don't want to turn them down, but why am I really doing this? So values, causes and then the last thing that I think people in the end come to answering this question the region or where, no matter how many millions, hundreds of millions, billions money will not solve the problem in full. I think it can ameliorate a lot of the worst parts of any problem, but want to see where I can do the most good. The other advantage of doing that, by the way, is not only focusing your philanthropy, it's going to eliminate a lot of unnecessary requests from outside your jurisdiction. That in and of itself, is a good thing.

Speaker 1: 15:00

Well, I think that's such a great screen is because sometimes you know, especially if you've amassed a lot of money and start giving it away, I'm sure there's no shortage of people who are gonna be reaching out and calling you to try to get more and more. And by having your core values and your family mission statement documented, it gives you a great screen of not 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 I had no idea there were so many charities and they're just talking about their relatively small geographic jurisdiction. So I think that's important. And I think the other thing about having a systemized way of giving it doesn't have to be through a foundation, but if it is through a foundation, at least you can say, okay, if it meets the guidelines, you may submit a formal request. But I alone am not the decider. It's gotta go through a process. So, of course, if the result is not good at the end you can blame the other members on the committee 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 be the bad guy, so that you don't have to go tell your high school friend you're not gonna give them $800,000 to invest in their startup.

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.

Speaker 1: 16:38

Well, chris, I wanna talk about. So once a family decides that charity is important and they wanna build this strategic plan, they start to put in writing their values as a family, their mission statement. The other thing that we've seen to be really important is like how and when to start, even involving children, because at the end of the day, some of these children might grow up in a more privileged lifestyle. Obviously, being mom and dad have wealth and if you're giving it all away, you want them to not have some animosity towards you giving their future inheritance away. You want them to be proactive, productive members of this charitable intent. And I just wanna throw kind of three things out that I've seen and talked to clients about in any experiences you have here, chris, but like kind of breaking it down into the most relevant developmental years, because at the end of the day, if you're in your 60s or 70s and have a 40 year old child who's just a loser I don't know there's probably not a ton we can do for you at that point. But in their core developmental days, like when they're kind of toddlers or in that preschool age, I think the most impactful thing is just letting them see you, letting them observe you helping construct that mindset or ideal around, like maybe donating some of their toys or their clothes to people who don't have nearly as much as maybe they do.

Speaker 1: 18:08

But then when they start to get into that school age, we wrote a book with a lady named Tish Raib who is she wrote a lot of Dr Zeus's books once Dr Zeus passed away we did this on the bucket plan but we kind of morphed it into three buckets a spend bucket, a save bucket and a give bucket and so kind of sharing that with school age kids. And again, if you've established something like a family donor advised fund, something that we talk about with our clients is maybe sitting around the dinner table talking and empowering the kids to research charities and they could tap into that family's donor advice fund and make grants to the charities that they've done research on or maybe they're participating in. And I think that goes all the way into high school or college age really having them get involved with those charities that you're participating in or that they might participate in, or even establishing a giving account for them so that it's kind of built or ingrained into their lifestyle. But is there anything you've seen 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're teaching is your resources, your wealth. It's to be treated with respect and diligence. And I think the other great thing is it is going to be a window to what the real world is to your children, in that they're going to see suffering, they're going to see deprivation, they're going to see dysfunction, and that's sort of a controlled environment for them to begin to see it and they can begin to ask themselves how does this come to be? What can we do to ameliorate some of this?

Speaker 2: 20:02

I think that's very important and I agree with what you said about the 40 year old. If you haven't successfully launched, so to speak, by 40, not much I hate to write people off at such a relatively young age, given that I'm now 67, but that's probably not much you can do. The other thing about philanthropy it's not going to if your family's, at its core, dysfunctional, I'm not sure it's going to make it fully functional, but it might make it less dysfunctional. So that for those that have really great resources getting the adult children involved in maybe having them on the investment committee of the family's investments. Maybe they're not voting, but they get to see the process, they get to hear the experts, they get to understand there's a way how money is deployed and how it's evaluated.

Speaker 1: 21:00

Well, and Chris I want to kind of touch on because I think that's such a great segue of kind of number one is making a plan, your values, your family mission statement, your budget around this. I think number two is the roles and responsibility, and so this goes into who's going to participate in this with you. How are decisions going to be made, how often are you going to meet on this topic? And then what's everyone's role in this? Like, maybe somebody's really involved in networking, maybe another person in your family or on your team is really good at analyzing, maybe somebody's more the visionary, maybe that's you, if it's your wealth of what you want the impact of this to be. But I think kind of writing out those roles and responsibilities. Again I go back to building a company. If you were going to build a company, you're going to have all of those roles and responsibilities. So maybe the participants are children, maybe they're immediate family members, maybe they're extended family members, maybe it's somebody like us at Alastair.

Speaker 1: 22:05

Financial Advisor, your tax advisor, there's attorneys who specialize in helping in charitable giving. But again, writing those rules of engagement out who's going to participate, how will decisions be made, how often are you going to meet Brings me kind of into that idea of a family meeting, having an agenda establishing a location, determining what activities you're going to participate in. I think all of those are so important, chris. Any thoughts on that?

Speaker 2: 22:36

You're hitting all the nails on the head. What I think I could add is also the dreaded S-word and the dreaded S-word, it's a polite word succession. You have a business. Every business that's well run has a succession plan in case some disaster happens. And when you have the teenagers, the younger adults, involved in the investing and seeing the process of how advisors are advisors not just financial, but legal and accounting, it people, you know, if you've got a family office, you're in effect you as the oldest generation. You're doing the on-the-job training of them.

Speaker 2: 23:22

So when the time comes, when the oldest generation may feel the time is ready to increase the involvement of the younger people and that's sending a message to the next younger generation they've got to do the same for their children. So if you're really talking about a dynastic tradition of giving, you're really doing all the hard work upfront, because I think it's hard. I think it's hard where you haven't given much thought to succession. The older generation's trying to cling for whatever their motivations, they're not involving the kids as much. I think they regret that. I haven't people I've known over the years. I think their biggest regret is they didn't involve their 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 want to briefly talk about the how. But before I do that, chris, I'd love like your personal perspective, because I know you know over your lifetime you've gone from where you're just giving money right, giving resources to you and your wife also are participants, like you, I believe. Are you still on MIT's brain research?

Speaker 2: 24:41

Yes, we are. We're still being reminded regularly of fully achieving our philanthropic potential, but we're doing great. You know my wife and I don't have children. In the end They'll get something very nice seven figures easily, but you know we're doing a great job. Now we are my wife's 40th anniversary of graduating.

Speaker 2: 25:02

I wanted to endow a research fund for psychiatric illnesses. My wife was a medical doctor, psychiatrist. When I was first able to do something that was bigger than writing a check, I endowed a scholarship at the Jesuit Prep School. My parents wanted me to attend, and that was one where I definitely regretted I didn't do it sooner, though my mother got to see it in action for nearly nine years before she passed away. So I'm more focused on what I want to do. There's some others that my law school, where I've taught since 2009 and created a course in charitable giving and wealth management, and then, when a naming opportunity became available it was actually a classroom 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 I wanted to do it, but I decided it's available and sometimes you just give. And the other thing that I think could be relevant to your clients is.

Speaker 2: 26:10

I'm a big believer in not only proactive philanthropy but preemptive philanthropy. If you're capable of a lot, the word does filter out, despite your best efforts to not have a LinkedIn profile or not having a social media account is the case with me. But they, you know people do tend to. They have good research. They, you know they can find out, find out. But I'd like to identify things of interest to me or my wife and decide to fund them. You can always say no. I always find, if you're being solicited, the best thing to do is just literally bite your tongue and then wait for the fundraiser to say something, because they're they will probably break before you do and, as Dave knows, as my background as a lawyer, I'm just way 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 my biggest takeaway from this, even thinking about myself and how I could adapt this into my family is, you know, number one, going back and kind of outlining what my own core values and kind of that family mission statement, and you know who and how. Of course, as you know, chris, I have a seven year old. She's starting to understand more and more of this. I have a five year old and then the two year old, but you know, it's not like, not like they're they're heavily involved in the decision making process right now.

Speaker 2: 27:38

But it's good. They know there's a world outside of everything that they want. And you know I was chuckling to myself when you were telling about giving away the toys. You know, as a kid I definitely had way more toys than I had and one day I came back from school in like third grade, you know, found out my mother and father had given away half the toys away to the Salvation Army. That was not one of my shining moments, 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 your wife about this, oh, I have that is your doctor.

Speaker 2: 28:18

Oh, I have. Well, I'm like I'm the world's largest, longest continuing research and observation project in 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 about giving there's these elevated areas on a technical side, and David, I know this is what I messaged David today, saying if you want to come on, go ahead. If you want to duck out me and Chris could handle this episode. And he said anytime I get to talk about taxes, I'm in, yeah.

Speaker 1: 28:49

I love it, so it's great For a client. Of course, giving outright cash is absolutely okay and there's some limitations on how much you can deduct in any given year and if you're not itemizing your taxes, your deductions, you're probably not getting a tax benefit for that Correct. The second level and what we generally would advise is if you're going to give somebody or something money, give them highly appreciated investments, non-retirement stuff, because again you paid a low amount but you get the tax deduction, as Chris said, based on whatever the current market value is. And now there's also another limitation for how much you can deduct of that type of giving in any given year and it goes on your itemized deductions again.

Speaker 2: 29:40

Yeah, that you know. When you're giving appreciated property, generally the limitation is 30% of your adjusted gross income. If you're giving cash, it's 60% of adjusted gross income. And both those cases were assuming you're giving directly to a publicly supported charity, and that's not hard to find out. I mean you just ask the charity for their tax exempt letter or if you're a more trust but verified type of person, like I am, you'll take the letter, but you'll also look at Publication 78 to see if they're listed among 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 want to be able to dole that money out into the future, over the next whatever one, three, five, 10, 15, 20, as long as you're alive. That's where a donor advice fund it's basically just an investment account we could open that Schwab or at Fidelity. You could make the gift and put the assets in and get the full tax deduction, but then you could make grants in the future from that donor advice fund. So it's like creating your own family 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 fund still, you know, call it the Whirly Family Foundation if that's what really excites you. And the thing that I think is a great positive about the donor advice fund one you have a right. You, as the donor, you have the right of recommendation and you know, theoretically your recommendation could be turned down by the donor advice fund. But that realistically is not going to happen in unless you're requesting recommendations to charities that are on the terrorist watch list. So that's not, that's not good, you're not going to do that.

Speaker 2: 31:44

And the other good thing is, if you have a donor advice fund, you will be able to maintain the relationship with the investment advisor. So if you've got a really longer term strategy for growing the donor advice fund and you want more equity, you know equity, alternative investments, whatever you have the right of recommendation. So that again, that is a fantastic way of continuing relationship with your advisor. I hope the audience has seen how just interlinked just the investing is with the giving of gifts. For some people starting out, I think they think there's a bifurcation of the two, but it's important to have very good investment counsel to what you'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 advanced things like setting up your own foundation, and I think there's a lot of misconception. We could do a whole podcast episode on this. We're not going to get into it here. But, chris, what's like, what's your kind of dollar limit? 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 back of a parent's mind. If your adult son or daughter is really Unemployable, the foundation will not be Probably a good vehicle to pay him or her a high six-figure salary, because the compensation has to be reasonable. You're going to really have to have an outside compensation study. So for a foundation that may just have several million dollars in it, you're not really going to be paying your children more than I'm picking a somewhat arbitrary number, but a hundred thousand dollars. The other thing to keep in mind about People who think they want to have a private foundation you will need to run the business and be like Caesar's wife. You're going to have to be above all of our approach. Why? Because the documents you're going to file for the private foundation the 990 are documents of public record and Every three or four years, every you know major Organization like a pro-publica.

Speaker 2: 34:08

You know they'll study them, they have time, they're looking for ideas and they'll chronicle some abuse about excessive pay or excessive travel. So assume everything you do is going to is being looked at and and and. If you're someone who walks the straight and narrow, you have nothing to hide. But to go back to your question, you know is there and not you know what sort of the rock bottom number. If you talk to lawyers, you know in New York or out in Silicon Valley they may say ten million. If you talk to Lawyers and investment advisors outside of those areas, you know something less than ten, maybe two million, maybe five million. It is a lot of paperwork and Despite your client, the donor's 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 the flesh 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 want to do it, do it so really it adds risk and complexity and risk, risk and complex and Disappointment and the last thing is the charitable trust, because there's a charitable remainder trust, which is a split interest trust, and when I say split interest, it means you or your estate gets some of the 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 really Meaningful philanthropy, you want to look at the charitable lead trust, that that's an arrangement where the front end the payments they're going to charities that you can direct and then the remainder interest goes can go back to you as the Establishers, the grand tour and you get an income tax deduction. Or it could go to your children. Sometimes you'll see in the lead trust described as a deferred inheritance trust, meaning your kids are going to get it and what can be fantastic about it is, let's say, you put a million in a CLT and at the time your children get it it's worth five million. That four million dollars is not subject to gift tax and On the front end you can devise the payout rate so that that million dollars you put in it's not even subject to gift tax itself, so you don't have to use any of your Current exemption. So that's very powerful and so the.

Speaker 1: 36:45

With all of these techniques, you know there's complexity to think through which one's right for you. There's huge tax benefits to do it right, but at the end of the day, the tax should not dictate the decision. Right it? If you give money away to charity, you're giving it a rate of a hundred percent, you know, and so the tax rates only 40 or 50 percent. You know the the charitable gift is always going to be bigger than the tax rate itself, and so you know this is for. I think anybody who's made it this long in the podcast I'm sure you're not doing this just looking for that next tax dodge on YouTube or Facebook reels. This is legitimate stuff to bring value to the charities. But, yes, there are nice tax benefits along the way that 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 lot of philanthropists are what I'll call for payers. They're very grateful for the education they receive, they're very grateful for the health care they receive, they're very grateful for the religious instruction they received. So they're, they're big drivers. And then I think there are others that just think it's the right thing to do. And then there are others who believe in an afterlife where you're gonna, there's gonna be an accounting at the end of days of your time, talent and treasure. You know they want to make sure they're racking up enough Tangible evidence of the good that they're doing and that they have been a good steward of what they've received.

Speaker 1: 38:17

Fantastic. Well, this was a great, chris. I appreciate you jumping on your.

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 the end. But you have my great Respect and admiration. You know so much of the tax code off the top of your head and the amazing thing to me is, unlike a lot of lawyers, you can explain it in a way that makes great sense. And you know I feel very privileged to be able to work with you on the tax management journey. We do have a lot of fun. I mean I never could understand why people think taxes is boring. I mean it's like just I never can 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 and I'll see.

Speaker 3: 39:05

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