End-of-year Giving Checklist + Building a Family Legacy of Giving

Principles of Wealth: Episode 3

I was a guest on Bartlett’s third episode of Principles of Wealth, hosted by my colleague, Holly Mazzocca. This month, we took an inside look at year end planning with a focus on charitable giving. Holly and I discussed how to build your year-end charitable giving checklist. You can listen to the full episode below, which includes an interview with Michele Carey from the Greater Cincinnati Foundation.

Listen below:

My Conversation with Holly

[NOTE: Holly’s questions/comments are in bold text. My responses are in normal/standard type.]

Jason is a certified financial planner (CFP®) and a licensed Certified Public Accountant (CPA) in Ohio and Illinois. In 2019, he earned his Certified Exit Planner Advisor (CEPA) designation, which enhanced his ability to serve business owners as they plan for a sale or transition. Before joining Bartlett, Jason provided comprehensive financial and tax planning services to a single family office. He cut his teeth in the public accounting world, providing tax planning and financial counseling to individuals, their families, and their business. Jason does a lot of work with our Bartlett clients to develop these deep financial plans, really with a focus on serving business owners, executives, and others with difficult life transitions underway. Jason, how would you summarize, at its core, what it is that you do for clients?

You can imagine these are very complex situations, with a lot of moving parts, a lot of things going on. And principally, our job is to try to simplify that for the client and to really lay out this is what you need to do to achieve your goals, so that they can go back and focus on what they do best.

Great. Well, let’s dive in. Let’s start talking about this charitable giving checklist. I know the idea for charitable giving can be really overwhelming to some folks. At its most basic level, where should those interested in giving start?

Yeah, I think we always say it really starts with charitable intent. As you’re looking at your local community, the country, the world, what are the things that you’re most passionate about that you can think you can make the most impact? And then from there, you match that up with your time, your talents and your treasure. We’re going to be really focused on the last one there, your treasure, your money, and you really start to put together a strategy around that. Have you done a financial plan that marries all of these charitable goals with all of your other goals? So really driving to how much can you give? And then you start to dive into the how and the when and which vehicles and all of that kind of part of the strategy. And really, then the next layer or the next level of this is how can you get others involved in giving? So maybe you can help instill philanthropic goals with your family.

This idea of utilizing giving as an avenue to connect with family, that’s a really interesting one. Can you go a little bit deeper on what steps individuals and families can take to really bring this idea to life?

Yeah. I think the first thing is quite simple, and that’s just talk about it. Talk about it with your family, talk about it with your friends. What are the things that they’re passionate about? What are the organizations that they have given to in the past and why? It sounds simple, but that really can help you give an idea of where to give. Another thing that we see clients do and we help them with, is family meetings. These are not where mom and dad sit you down and tell you how you need to improve. This is more about getting around the table and talking about what philanthropy means to you and why, and how you’ve supported certain organizations over your lifetime, and how maybe they can get involved in that. It might lead you to something where you have a shared donor structure. That could be a donor advised fund, which we’ll be talking about later, or a trust or a family foundation. And maybe you can get the family around a table talking about how you can bless others.

That’s great. And I know one of the tips and tricks that I’ve seen in my own family and that I’ve seen work very successfully with clients also is the idea of writing letters. It’s one thing to talk about it, and it’s wonderful, but to have a letter that you can go back to and really share some of those values. Have you seen that work in practice?

Yeah, absolutely. And we’ve seen letters, whether it relates to charitable giving or even giving to your family. And it really explains the pathway to where you are today. It really helps to put in writing how the wealth was created. Maybe it was grandpa started a company and was able to build that company and sell it off and then have that stock for the family long term. And maybe it also gets into the things that we’re talking about today, the philanthropy. We started this fund several years ago and we’ve grown it to this level, and each year we give a piece of that back to the community.

I know I have a few letters in my dad’s handwriting and my grandmother’s handwriting, and there’s just something so fantastic about being able to have that as a legacy and be able to come back to that. It’s a little different than just receiving an email these days. So once our donors have an idea of where they want to give and how they want to give, what’s the next step? How do they think about actually structuring a gift?

I think there’s a lot that goes into that. There are a lot of ways to give. There are cash gifts, there are gifts of marketable securities and then there’s different vehicles and ways to give. A couple that we can really focus on are, first, the cash versus marketable securities decision. Cash is certainly easy. Checkbook, write it out, give it to the charity. But maybe you can get even more impact from a tax perspective by giving low cost basis marketable securities that you’ve held for more than one year. The reason why is that you get a full, fair market value deduction, but you don’t have to pick up the capital gain that’s unrealized in that position. It could be a double benefit.

And when we look at different structure, the one that that comes to mind is a donor advised fund. A donor advised fund, think of that as a charitable giving account. And you can give securities into it in one year, get a tax deduction, and then it’s up to you to give it out to the different charities over many years. So there’s no rule that says that if you give it into one year, it has to come out in that same year.

Tell me a little bit more about what would be the telltale signs of when someone should think about opening a donor advised fund?

When you look at your tax situation and you see that you have a very high income year. Maybe you sold a property or you sold your business, or maybe it’s just been a really great year in the market and you have a lot of capital gains and you are looking for ways to counteract that income, maybe you load several years worth of charitable contributions into the donor advised fund, and then divide out those things to charities over the next several years.

Outside of the donor advised funds, which other charitable giving structures should people be thinking about?

Well, for those who have to take required distributions from their IRA, there’s a strategy called a qualified charitable distribution, where you take money directly from your IRA and send it directly to a charity. And you can do up to a $100,000 per year. And the amount that you give to charity, you don’t have to pick up in income, but it still counts towards your required minimum distribution.

Oh, great. So it can just go straight from the IRA out. You don’t realize the income, but you get the benefit of gifting to the charity.

Yes. And one of the major benefits there is that you don’t have to itemize your deductions in order to take advantage of that strategy.

So we’ve thought a little bit about structure. First start with charitable intent, then develop the strategy. Think about maybe where to involve the family along the way, or others who are important in your life, and then structuring the gift in these very tax efficient ways. Can you share an example or a story with us that brings this all together, so that we can see how it works in real life?

Sure. We serve a family out west, three generations of this family. Consider the matriarch, who’s in her late eighties, early nineties. The next generation, her children, are maybe in their fifties and sixties, and then their kids who are in their twenties and thirties. And they have a charitable vehicle that they formed, over time the matriarch formed it. And in this particular case, it’s a private foundation. But this can work for a donor advised fund or even a charitable trust.

And with these kind of families, the big challenge is getting everybody together. So in the past, maybe they’ve done that via travel: example: “Everybody come to this destination and grandma pays for it.” As we saw with the pandemic, maybe some of those options are gone now. So what are ways that we can bring families together? And this family in particular brings them together around philanthropy. So instead of the matriarch deciding where the money should go from this private foundation, which charities, she charges each grandchild with researching, and then presenting their ideas of which organizations the private foundation should give each year. And what it ends up doing is these grandkids get to express themselves in terms of their philanthropy goals, and it certainly puts a smile on the matriarch’s face to see her grandchildren carrying on that giving legacy.

That’s really great. So everyone’s included, everyone’s involved. If you can be together, that’s a wonderful way to do it. But even if you have to do it via Zoom, at least there’s a way of bringing the family together.

Yep. The last couple years, we’ve done it over Zoom, and it’s been a great thing. And you can still see smiles on Zoom.

That’s very true. Well, thank you Jason, for your time today. This has been really great, just to think about the high level of the charitable giving check lists, those things that we need to keep in mind. Any last tips or tricks for people as we head into the holiday season?

The only thing I would say is that if you want to get a charitable deduction, you have to make it before the end of the year. So it’s never too soon to start. Get those giving letters in and get them to the charities as soon as possible.

I do feel like this year, we’re all shopping before Thanksgiving and I’m also seeing, it tends to be a lot busier this year on the charitable giving route even earlier. So that’s a great tip to people to get ahead of the game this year. Thank you so much, Jason.


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Thanks again for joining us!

The information in this podcast is educational in general in nature and does not take into consideration the listeners personal circumstances. Therefore, it is not intended to be a substitute for specific individualized financial, legal or tax advice to determine which strategies or investments may be suitable for you. Consult the appropriate qualified professional prior to making a final decision.

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