The Gift That Keeps On Giving

Establishing your legacy takes strategic planning. The rewards go beyond tax advantages.

by H.M. Cauley

March 1, 2005

W hen executive women are surveyed regarding their attitudes and concerns about money, one thing pops up consistently: Many of them are especially interested in making a difference and leaving a legacy. The question is how to best make that happen and ensure that their money is being put to good use. Donations of cash, goods and stocks are always welcomed by charitable organizations - and by accountants who know they offer some relief at tax time.

"For a lot of people, giving comes from the technical standpoint of tax and estate planning," says Lydia Whitman, charitable advisor of Wachovia Trust. Working for a division of the bank that advises individuals on philanthropic planning brings her together with people from around the state who make donations up to $5 million to foundations. "But the deeper issues are how you want to engage your family or friends; what kind of impact you want to make; and what kind of legacy you want to leave. Particularly for women, that requires a very detailed set of conversations." The spirit of the donation and the thought that goes into it are what make it a meaningful gift, says Whitman.

Still, the bottom line for many is what such donations will shave off at tax time. "A tax write-off is often the motivation," asserts certified financial planner Kay Shirley, president of Financial Development/Mutual Service Corporation in Sandy Springs. "But the money also needs to be directed where the giver wants to help."

While many people initially think of making a donation to their college, university or religious institution, Whitman likes to get them thinking beyond the norm. "I want them to find a deeper meaning for their giving," she says. "That requires serious soulsearching, but it's also where the fascinating work plays out. Not everyone chooses to do it the same way; it's a personal choice that becomes a meaningful part of your tax plan. That's what makes it engaging."

Shirley follows much the same track to get her clients in the giving mood. "I suggest they examine their own interests, and select an area where they want to make a contribution," she says. "I let their interests be the driver."

One particular charitable trend Shirley has noticed in the past few years is a growing interest in making lasting donations that continue well after the donor's death.

"I have a lot of people interested in making a contribution that will be part of their estate, particularly as an endowment where the charitable organization spends only the income from the principal," says Shirley. "There are many more people without children who want a way to contribute to society. One way is to do that is with your money." Indeed, many executive women find themselves in exactly the situation Shirley describes.

Shirley suggests those looking to make contributions of $100,000 or more consider endowments to a school, organization or other cause that can benefit from the annual interest. "The $5,000 generated from a $100,000 contribution makes a great scholarship," she says. "Most schools will allow you to name your endowment so you can have a lecture series, scholarship or professorship with your name on it. It's not just money that's spent and gone."

Another way to pass on wealth and enjoy a significant tax advantage at the same time is to donate stocks. "Instead of giving cash to a nonprofit organization, consider stock," suggests tax expert Lori Evers, a principal of Evers and Fox PC. "You get the same tax deduction as if it were cash, but you don't pay tax on any gain. If you just sell it, there will be a lot of tax."

Evers has also found a growing interest among her clients in establishing charitable remainder trusts. "It's one of my favorite charitable devices that most people do for the tax reasons," she says. "Basically, you contribute assets to a trust and take an annuity out for your lifetime. Upon your death, the trust goes to whatever charity you designate. It's a great way of giving yourself a cash flow, particularly when you've left a company with a lot of stock, but you still need away to replace your paycheck."

When it comes to deciding what to give and to which cause, Atlantans have an ally in the Community Foundation, a local organization that has been helping donors distribute their wealth for more than 50 years. Foundation advisors currently work with about 650 donors who represent almost $500 million in assets.

"We are not only efficient and effective by putting statements online and handling the nuts and bolts of the gifts; we also make about 300 site visits a year to nonprofit organizations, and we share that information with donors," says executive director Alicia Philipp. "Then they can make the best grant possible. They may want to make small loans to business people getting started; make a contribution to organizations that are battling teen prostitution; or setup a scholarship fund. Some let us setup their fund and don't want to be that actively involved. They can choose whatever they want."

The Foundation requires that anyone starting a fund agree to donate at least $50,000 after three years. "Many people start with $10,000 and add another $15,000 or more later," explains Philipp. "It's not a huge amount."

One trend that Philipp has noticed in recent years is the desire of many donors to engage their adult children in their philanthropy.

"A lot of people want to transfer their impulses and ideas to the kids so that they can take over when the parents die," says Philipp. "The key thing is that we're helping them become raging philanthropists."

Visit www.acf.org for information about the Community Foundation.

Tips for Charitable Giving
¥ As of Jan. 1, 2005, donations of cars are limited to what the vehicle actually sells for. Blue book valuations no longer qualify.
¥ For contributions of more than $250, you must have a written acknowledgement from the organization you're donating to. A cancelled check may not be enough proof of donation if you're audited.

Donations made through the end of January 31, 2005, for tsunami relief are deductible on your 2004 taxes.

Among H.M. Cauley's favorite charitable causes are her two college-age children.

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The Gift That Keeps On Giving

Establishing your legacy takes strategic planning. The rewards go beyond tax advantages.

by H.M. Cauley

March 1, 2005