Wrapping It Up at Year End: How to Allocate Your Charitable Giving by Nancy B. Gardiner

The other day my daughter called me in a quandary about how much to give away to charity this year.  When I paused, she said, “Why don’t you have an answer? Isn’t this what you do for a living?” I had to explain that this is not an easy question to answer, even for those of us who spend a good deal of time advising individuals and families on how to allocate their philanthropic dollars. So, as stores advertise yet another markdown and nonprofit organizations send their final appeals for the year, many donors are still wondering, “Have I done enough?”  What is enough?

There are no hard and fast guidelines, as every donor’s situation is different. Surveys by major foundations and other philanthropy-serving organizations vary, but show that on average most adult Americans give away between three and five percent of their adjusted gross income every year. There are a couple of guideposts that you may have heard about.  For example, in the context of private foundations, there is a 5% distribution requirement, although this is a floor, not a ceiling. Some donors are tax driven and make donations to new or existing donor advised funds with an idea that they will allocate the dollars to organizations later, perhaps in the new year when things aren’t so hectic. Some apply traditional religious tenets about giving and allocate a percentage of their income

Donation Guidelines

Over the years, we have developed some “rules of thumb “when advising clients at this time of year, or any time of year for that matter.

  1. Giving is good:  Giving to a legitimate charity is positive, no matter what the size of gift.
  2. Giving is personal: Every gift is made in the context of the donor’s life and circumstances. This is what makes the gifts so meaningful. Do you have a personal family situation that compels you to give? Do you have student or other debts to pay and therefore feel a bit constrained this year? Are you engaged in personal, family giving by supporting aging parent or an ailing friend? Do you volunteer regularly, or have you chosen a public interest career that leave you with less disposable income to give away?
  3. Gifts are made in the context of your overall “helping” allocation:  Just as you consider how to allocate your retirement or other investment assets, so too you can consider your overall “compassion” or “helping” activities. Think of your charitable giving, volunteer work and helping others together and make sure that you are satisfied with your total giving. This helps to account for those who have less cash, but who help in other ways.
  4. Gifts to both large and small organizations make sense:  Consider where your gift is going.  Are you giving to a large organization where your gift may feel like a “drop in the bucket?” Perhaps it will, but perhaps this is a moment in time when such gifts are very important, such as gifts to the American Red Cross following Hurricane Irma. That said, some donors prefer to give locally, to a smaller organization that does not have the budget to attract larger gifts from donors who are “ from away.”
  5. Gifts to organizations you “know” can be meaningful:  Do you or your friends volunteer for the organization? Is it well regarded in your community?  These considerations can provide assurance that your gift will be put to good use.  That said, don’t be afraid to respond to thoughtful outreach from someone new.
  6. Large or small, the gift should be “right sized”:  As noted above, the size of the organization to which you make the gift is important. You should also consider how the gift “fits” in the context of your own personal expenses, whether large or small. This will help you arrive at an amount you feel comfortable giving. If you were to allocate the cost of your weekly coffee purchases, for example, would that feel right-sized?
  7. Finding ways to “leverage” your gift can make a difference:  Perhaps the organization to which you are giving has received a challenge or matching grant from another donor. This might make your gift more meaningful, generating two, three or even four times the amount of your gift in additional donations. Will the very fact of your gift inspire other donors, large or small? Successful campaigns have a way of generating their own forward momentum. Perhaps your family wants to combine and make a gift together, to honor a family member, or in lieu of holiday gifts. Perhaps you have appreciated stock. Giving shares of such stock, instead of selling it, can increase dollars to charity and reduce your overall tax burden.
  8. You can take steps to ease the burden on organizations you like:   Regular giving helps organizations budget and plan. Whether you make a multi-year pledge or simply give regularly each year, without being asked, you take some of the fundraising pressure off of an organization. Allowing your name to be used can inspire others to give. Just as you look for the names of people you know when you choose to give, so too your name may inspire others.

In the end, donors want to make a difference. Exercising your giving muscle will indeed increase your giving strength and will help you support others in need of your help. The packages that we share with one another at this time of year come in all different sizes.  There is no “rule” to tell you how much to give. Allocate your time and resources wisely and remember that, in the end, the important thing is that the season is about sharing and good will.

About the Author

Nancy Gardiner is a Partner and Director of Family and Office Services at Hemenway & Barnes LLP. She works with families on legal, tax and investment aspects of governance, succession and all facets of family office creation, operation and management.

Nancy helps clients meet their philanthropic goals by advising them on all aspects of charitable giving, including creating charitable vehicles, such as private foundations, advising families and individuals regarding areas of interest and structuring of individual gifts. Additionally, Nancy counsels development offices on issues relating to major gifts.

Read Nancy’s full biography here.

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Building a Family Legacy One Story at a Time by Nancy B. Gardiner

At the start of the holiday season, we pause to give thanks and to focus on what Is important to us. Behind the glitter and commercial nature of the Thanksgiving to Christmas run – sprint really – are stories that move us. We are affected by the struggles that others face and we want to reach out and help. The public stories deserve attention of course; there is much sadness in the world. In addition to these, I am compelled to look for the story behind the story – the one that doesn’t make it to the newspaper. In fact, the story may not be current at all, but instead may be part of the fabric of your family history. In conversations over the years, I have seen that the gifts motivated by personal stories and the family values that emanate from such stories are the most meaningful. A successful investor sponsors a scholarship at his alma mater because he received such a scholarship and it transformed his life. For sure, the donor’s children and grandchildren will not have experienced the same hardship, but they will appreciate the family legacy more if they know the story behind it. We tend to remember things when they are attached to a story. Family lore exists because of our hunger for stories. Did grandpa really fight in the Pacific during WWII? Was uncle Chris really at Woodstock? The meaning can continue from generation to generation if the story is retold.

When my children were little, there was a starter batch of sour dough that was passed around from house to house – divided and subdivided, wherever it was kneaded. From it, many loaves were made. This is also true of the stories we tell. We all come from somewhere and a piece of that stays with us. These experiences inform our giving. Sometimes, it is hard to share. We don’t want to remember our troubles, or impose them on others. Yet telling even a part of a story, distilling the values that our experiences have instilled, can add power to any gift, no matter the size.

At this time of year especially, I encourage people to share their stories. Some people over share and others are reticent. Here are a few strategies that have worked:

  1. Write letters to your children or grandchildren. Tell them stories you want them to know. Writing helps if you are reluctant to talk and also helps make the record more permanent.
  2. Keep a family tree. The old family bible where such things were kept is a distant memory, but families long to know where they come from. The personal record often says more about family stories than genetic testing that is currently in vogue among some.
  3. Even if you don’t want to share the details of your story, try to let others know what is important to you, what values matter to you. Call it whatever you’d like– a values statement or just a list of what matters. Don’t let your concern about how it looks discourage you.
  4. Travel with your family to show them the story. The journey doesn’t have to involve a major trip. Is there a local monument to a family experience? Is mom’s childhood neighborhood at all far away? Would a drive by the old elementary school convey your values to your family. Don’t be embarrassed if the story is too sad, or happy or seems “dull.”
  5. Feel free to edit your story. I am not recommending fantasy, but remember that legacy, like giving, is personal and in no small way also a creative process. In this season, the story may be one of the most important gifts that you make.

Learn more about the Hemenway & Barnes story here.

Contact Nancy B. Gardiner 

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How to Help Neighbors and Communities in Time of a Natural Disaster by Gioia Perugini

With national attention once again turning to the wrath of a powerful hurricane, we are returning to a topic about which we have written before, the persistent question of how to help neighbors and communities in times of a natural disaster. With such disasters unfortunately becoming more common than any of us would like, and with their destruction often disproportionately impacting vulnerable communities (domestically or internationally), where should donors focus their charitable response? Below are a few points to help guide your considerations of how and where to respond to needs created by natural disasters.

Give now, later, or both?

Research conducted by The Center for Disaster Philanthropy (which was created as a resource and clearinghouse for disaster philanthropy information in the wake of Hurricane Katrina in 2004) shows that most disaster giving is made within a few days after a disaster, primarily by donors without ongoing disaster experience. The needs are real and the images on television, in print, and across the Internet show just how important giving to disaster response is.

Even while a donor is supporting immediate needs, it’s important to remember that it takes time for impacted communities to assess the full range of needs and to understand how private support can boost public resources for disaster recovery. It will take weeks, months or longer for Texas, the U.S. Virgin Islands, the rest of the Caribbean, and Florida to fully understand the scope of destruction and to develop plans for recovery and rebuilding. Philanthropic support will continue to be a necessary component of mid- and longer-term recovery. In addition, the more vulnerable and isolated communities (the U.S. Virgin Islands, for example, where food supply and volunteer support take longer to deploy) might need relief efforts for longer than other geographies.

Where do I give?

Technology has made immediate charitable response to natural disasters just a click away. Whether it’s text-to-give, online donations or giving at the cash register, mobilizing donors for immediate response has been faster than ever. Our advice to donors is the same as it would be when developing their overall giving priorities. Start with your passions or what moves you. Are you most concerned about the safety and stability of people most impacted by a natural disaster? Are there geographic areas that are more isolated or vulnerable, and are likely to be slower to move toward recovery? Are you moved by the images of animals in need? Are you concerned about the availability of fresh water and food? Look to local resources who know their community’s needs and the necessary delivery mechanisms. Increasingly, municipal officials (mayors or governors) have partnered with local or state-wide community foundations to establish relief funds, to be used for longer term recovery efforts (as seen most recently in Houston and Florida, as well as for recovery after Hurricanes Sandy and Irene).

Donors should also take care when giving immediately following a disaster. Is the organization or people involved legitimate? Sadly, there are instances where fraudulent efforts attempt to take advantage of those in vulnerable situations. In addition, we have learned that, in the case of a disaster, money is most appreciated in the immediate aftermath. The logistics of delivering goods can be overwhelming, especially if transportation routes are compromised. But there are instances where neighbors can help neighbors in very tangible ways. For example, a friend’s sister in Houston offered to collect and distribute gift cards for food and supplies (such as grocery store and drugstore gift cards) to her neighbors who had needs immediately after the flood.

Learn from past experiences

Much has been written about disaster response, recovery and resilience. What can we learn from past natural disasters, including Hurricanes Katrina or Irene or Sandy? With two storms happening in rapid succession, how can areas prepare better in advance? For example, Comcast set up Wi-Fi hot spots across the potential path of Irma in anticipation of the storm’s arrival, not after it passed through like it did with Harvey. The state of Vermont spent several years focused on rebuilding “resilient” communities after Irene, so that future natural disasters would not be so devastating. Typically, local leadership will take the lead on assessing need and in developing public/private partnerships to coordinate the response.

While we wish we never had to write blog posts like this, helping donors be organized in their response to natural disasters will hopefully ease the burden of those impacted by these terrible storms.

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