Philanthropy – Taking the time to give well
By Brad Scott – Founder EWM Group and the Institute for Family Wealth
We have all at one time left our important gift buying for loved ones to the last minute. Despite our best intentions, buying gifts in a hurry rarely results in the same satisfaction as those well thought out gifts which show consideration, planning and effort.
Similarly – charitable gifts made at the last minute (June 30 anyone?) or on impulse are unlikely to give you the same satisfaction as well planned giving.
In the spirit of the season here are some reasons to plan your charitable giving to get better results.
You are unique
Taking the time to think about what causes are really important to you is a great way to focus your giving. The greatest satisfaction comes from making a difference in an area you are passionate about. Compliment that by finding a charity or cause with a local presence. This leaves open the option to see your chosen charity’s work first hand or get involved using your skills, resources or time. This kind of self analysis and planning will ultimately give you a richer experience.
Planning equals performance
Do your research and be sure you understand what the charity will be doing with your money. Most charities are more than happy to explain how your funds will be used. It is also perfectly acceptable to request some information in writing before formalising your gift. Larger gifts ($50,000+) require more planning and documentation to ensure the donor and the charity are transparent about what the donation will achieve and how the donor will be acknowledged. I am often surprised at how major gifts are agreed on a handshake only to find one or both parties misunderstood each other and at least one party is disappointed with the outcome.
It’s good for business
Planned giving using a vehicle such as a Public Ancillary Fund is a great way to coordinate workplace giving and provide an avenue for the business to show people what it stands for. More and more businesses are using Public Ancillary Funds to channel their corporate giving, often combining business donations with workplace giving. The decision making process can involve all staff and help streamline multiple ad hoc internal fundraising efforts. This in turn leads to more effective giving and a stronger business values culture.
Better tax deductibility
There are numerous tax benefits to planning your giving. Australia has over 50,000 charitable organisations but thousands of these do not have tax deductible status. Check the charitable status of your potential recipient and don’t be afraid to ask questions or for proof of their tax deductible status. For those of you that keep receipts for tickets to charity lunches and silent auction items keep in mind these are, almost without exception, not tax deductible.
Bigger giving requires better planning
Establishing a dedicated charitable fund takes a little time and planning. While there is no minimum, our experience is that between $300,000 and $500,000 is the right starting point. If you are expecting to establish a giving vehicle following a large income event in the next 3-5 years, planning ahead will be important from a taxation perspective as well as helping you build a corpus of funds.
Depending upon the structure, a minimum of 4-5% of the funds’ capital must be distributed each year. For those people paying a large amount of income tax at the highest bracket it provides a tax effective way of giving out of your pre-tax income and can help build up a corpus for giving in the longer term.
Over the years, we have helped our clients navigate the giving process and develop their expertise in this area. As giving grows in Australia so does its complexity and, like most things, a small amount of planning can improve the experience immeasureably.
With that in mind, I’d like to highlight the words of a lady whose gifts and giving were both significant and always well considered:
“Be optimistic – and always think of other people before yourself,” – Dame Elisabeth Murdoch
About Brad Scott, EWM Group and the Institute for Family Wealth
Brad Scott in an international speaker, and founder of EWM Group and the Institute for Family Wealth. EWM Group is the National Gold Sponsor of Family Business Australia and partner to its family business and adviser members in the areas of Family Office, Philanthropy, Wealth Management, Family Governance, Coaching and Education.
EWM Group specialises in working with successful individuals, families and family businesses in protecting their wealth and their families for the benefit of current and future generations. This includes Family Office advice, Investment Governance, Strategy and Policy, Wealth Protection, Preparing the Next generation for the future roles and responsibilities, Philanthropy, Risk management, Specialist Asset Management and a range of administration, compliance and back of house requirements. Brad can be contacted directly on 0416119070 or firstname.lastname@example.org.
The Institute for Family Wealth provides bespoke education solutions for families and family business to assist in the human or soft skills in preparing family for their future roles and responsibilities. The Institute also provides training programs for advisers to families to change the conversation from a technical one to a family one assisting their clients and well as supporting themselves and their organisation to take the next step to one who looks beyond the money to include the entire family as the client. Our tools and process have been tested over time and they are immediately implementable.