by: Dana Pingenot, CFP®, CLU®, CAP®, Managing Director

 

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.” ~ Charles Dickens, A Tale of Two Cities

 

The world we live in, especially the past 18 months, reminds me of a book I read back in high school by Charles Dickens, A Tale of Two Cities. If you’ve read it too, you may recall this story has enduring themes on oppression, isolation, compassion, justice, social anarchy, sacrifice, resurrection, and the renunciation that fosters renewal. Even if you haven’t read it, these are timeless themes that we are dealing with today as much as the readers of A Tale of Two Cities were when it was published in 1859.

 

Think for a moment about the “two cities” as a metaphor representing the gap between where we as a society are now and where we want society to be. — I believe philanthropy can serve as a bridge between this gap. Each of us can define the “two cities” however we want based on our own values, experiences, needs and desires. Philanthropy can be a meaningful connection to help us elevate to a new common ground. I see philanthropy as an overarching positive mindset that spurs action to alleviate tension, lift others up and make a difference—whether it’s simply lending a helping hand, finding a solution to a problem, or joining a cause to make an impact.

 

Why do I use the word philanthropy instead of charity as my world view? Philanthropy and charitable giving are often used interchangeably. Both are important in the non-profit sector, but they are different. Philanthropy is the strategic process of understanding our underlying values, identifying the root causes of systemic issues, then taking action to find a solution and make the world a better place. It’s longer-term in nature. Charity is a compassionate response to an immediate crisis or a short-term need. The two go hand in hand.

 

Philanthropy’s big-picture, strategic view is fulfilled through the actions of charities. For example, if one of your values is early-childhood education, you may choose a charity who states, “We want all children in our community to have the opportunity to attain an education—we work with schools and community leaders to support our teachers, their educational programs, and the after-school programs to keep our children engaged for learning and advancing to self-reliant, thriving adults.” Sometimes charitable entities are used when you have multiple goals or multiple members you want to benefit from your gifts. For example, if your goal is to provide for both a charity and your family, you could provide an income stream to one and the remaining assets to the other at the end of the defined time period by gifting to a charitable trust. Keep in mind, philanthropy and charitable giving aren’t just for the high-net worth. Everyone can receive the multiple benefits of philanthropy helping others in need, your own feeling of fulfillment, and receiving the financial benefits through an income tax deduction and/or the removal of these assets from your taxable estate.

 

I will discuss charitable giving in an upcoming blog article. Additionally, my colleague, Steve Novak, addresses broader estate and gift tax issues in his blog post entitled, Getting (Closer) to Yes if you would like more information on those topics.

 

How to Move Forward and let Philanthropy Bridge the Gap:

 

1. Define values and issues – start your philanthropic plan by defining your values, where you see a problem or a need, and where you want to make a difference.
2. Define the resources you need – work with a financial advisor to help you first determine the capital needed to support your lifestyle for the rest of your life. We can help you make philanthropy a part of your long-term financial plan and help you incorporate giving into your everyday life at a pace that is comfortable for you.
3. Define the excess funds available for others – your financial advisor can help you determine the excess capital available for (1) gifting to your family if this is your goal, and/or (2) gifting to charitable organizations.
4. Teach others to “fish” for themselves – you might want to select charities that are empowering beneficiaries to grow out of their current situation and pay it forward. Plus, you can involve your family today (and potentially future generations you will never meet) in your philanthropic plan to teach them about your family values and how to carry out a philanthropic plan to make an impact. This can be a powerful way to leave a legacy.

 

Our team welcomes the opportunity to meet with you and your family to serve your financial and philanthropic objectives and navigate the many nuances of the above strategies.

 

“It is a far, far better thing that I do, than I have ever done; it is a far, far better rest that I go to than I have ever known.” ~ Charles Dickens, A Tale of Two Cities

 

This post contains information as a general guide, and RGT Wealth Advisors is not offering financial, investment, legal, accounting, tax, or other professional advice through this writing.