Planning to give and leaving a long-lasting legacy
A big part of my life includes going to fundraisers. And when I’m not going to the fundraiser for somebody else, I’m busy planning our own events. And then there’s the annual appeal, which has become more frequent and ubiquitous as well. Likewise, one cannot log onto social media without seeing an ask for one cause or the other. I admit, readily, that any one of those could be from me, and – truthfully – sometimes the constant fundraising can be a bit overwhelming. By the same token, the need IS great and for the nonprofit sector to do its important work; financial resources ARE needed, and most of those resources are raised annually and in the public eye. Like it or not, we are a state which has chosen to deliver a lot of services through the private, nonprofit sector. Fundraising is the other side of the “no income or sales tax” coin which we must all live with. It is my contention that we have reached a saturation point with the annual give and we need to look at other areas for our financial support needs. One of those areas, the one I want to discuss with you this month, is planned giving.
What is planned giving? In a nutshell, it is when a donor makes a deliberate decision to leave some portion of their assets to one or more charities. Typically, but not exclusively, that is at the time of their death. I’ve been doing a lot of reflecting on this type of giving lately and wanted to share with you a few perspectives. First, and perhaps most shocking, is that 60 percent of adult Americans have no will. That is to say that if they were to die today, their assets would be adjudicated by the courts. As a result, what can happen is that more of their estate goes to taxes and lawyers, and less goes to heirs … and nothing goes to charity. I’m going to go out on a limb and say that this is not optimal or desired for most people. Another observation that I have is of our local nonprofit scene. Most of us talk about planned giving a little bit, but for the most part it’s along the lines of “don’t forget us when you die.” I’m sorry, but that just doesn’t seem to me like it honors what a donor might really want to do, which – in my opinion – is to leave a legacy and be remembered in a way that might reflect their values. My final observation is that our community, Southern New Hampshire, is ready for this conversation. That is because we have an aging population, which has some degree of wealth. You don’t need to be incredibly wealthy to think about this stuff. If you have any level of retirement savings, perhaps a 401K, perhaps you own your house, perhaps you have some life insurance… if that’s the case, you need to start the conversation. But where do you start?
My suggestion is that there are three logical places to begin this conversation about estate planning. It could be with an attorney, preferably one who has a level of expertise in setting up wills and estate plans. You could also start with a trusted financial advisor and get their recommendations on the naming of beneficiaries and the establishment of vehicles such as trusts to protect assets from taxation. Or, thirdly, a good CPA could be a place to begin the conversation. I will give you just one example, which is one of many, that could make sense for somebody, and that is the “Charitable Remainder Trust.” This type of trust involves putting assets into a trust which can be used for current living expenses until the beneficiary dies, and then passing along the assets to a charity. Because the trust is set up this way, the income from the trust can avoid taxation, so long as the final beneficiary is a charity. This type of trust is ideal if somebody has highly appreciated assets such as stocks, bonds, or real estate, that might otherwise be subject to capital gains taxes. There are other vehicles which can play a similar role – avoidance of taxes, and good current use, while benefitting society down the road.
To help increase understanding of these issues, over the past few months we have been working to assemble a team of real experts in this area and over the next few months will begin rolling out an educational series to the public. These will be in the form of educational breakfasts or “lunch and learns” and will be a great opportunity to learn more from people who really know the best practices. From a United Way perspective, while I would of course hope that at some point somebody will see the wisdom of making a planned gift to our organization and in turn benefitting many others, realistically it’s just as important to us that other organizations begin receiving planned gifts. Over time, with an increase in this type of giving, the need to do so much “here and now” fundraising will diminish and lessen the pressure on the public. So, in the end, we all benefit from the approach, regardless of which non-profit might be the beneficiary.
A final word: this topic can be very personal. I know from my own experience that these conversations within a family can be difficult. Nobody wants to confront mortality and think about death. We all know the adage, though, that the only thing which is certain in life is death and taxes. Well… maybe if we are more intentionally planful, it won’t be the taxes part as much. Thank you for listening and thank you for LIVING UNITED!
Mike Apfelberg is president of the United Way of Greater Nashua.