When our social cohesion is in doubt, it may be consoling to realize how generous Americans are in making private donations of money and time. There are lots of numbers that show us to be a giving people.
Johns Hopkins University regularly monitors the philanthropic activity of 36 nations: America tops the list for donations and comes in third for volunteer activity. Contributions for the US represent 1.85% of Gross Domestic Product (GDP), followed by Israel at 1.34% and Canada at 1.17%. For volunteer hours, America ranks third, behind the Netherlands and Sweden (source: Forbes).
Motivation for philanthropy is difficult to pinpoint. However, there is a correlation between lower giving in countries with richer social welfare systems – a topic at risk for sparking a chicken-and-egg debate. Nonetheless, the Johns Hopkins rankings show Sweden 18th, France 21st, and Germany 32nd in the philanthropy rankings.
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A client recently discovered she can double her already generous donations to her alma mater. This followed a routine cash flow analysis by our office. As a retiree, of course, she requires assurance of not outliving her assets, and that we were able to show.
Our projections showed that she could double her rate of giving without eroding principle over the long-term. Making these gifts now, she has the satisfaction of seeing her generosity in action – a scholarship to a deserving student with whom she remains in contact. Creation of a legacy during her lifetime has proved quite a meaningful experience.
Charitable contributions are a highly personal matter. However, our office is glad to review your cash flow within a financial planning process to determine if there are greater gifts you're able to make to your selected charities.
One source of giving with some tax advantages is the IRA for those who are over age 70, the age at which retirees are subject to Required Minimum Distributions (RMDs). Congress has made permanent the opportunity to satisfy
RMDs through contributions made directly from the IRA to a qualified charity. This method of donating may carry with it additional tax savings that we can estimate in a separate meeting. We have standardized forms for processing such a donation through Charles Schwab & Co.
Our firm provides a wide range of financial planning services, and it is our intention to build upon our planned giving skills, including regular participation in the Northern California Planned Giving Council.
Please let us know if we can provide any additional help on this or any topic.
With best regards,
Milo F. Hanke, CFP
Manuel Burkhardt-Apolonio, MSFP
Photo by Christian Dubovan on Unsplash