‘Tis Better to Give…

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“It is in giving that we receive.”
– Francis of Assisi

As we approach the holiday season, I’d like to offer all of our readers my most sincere best wishes for a wonderful holiday week next week. We at Concentus are thankful to have you as part of our community, and would like to wish you a wonderful Merry Christmas, Happy Hanukkah and all the best of health, happiness, and prosperity in 2017!

Better to Give than Receive?

Earlier this week I was having a conversation with a client and friend, about the nature of this old saying, and how my understanding of it has changed as I have grown older. When I was a child, and people would say this around Christmas, I would quietly snicker to myself.  After all, it seemed ridiculous to me that anyone would rather give something up, than get something!   I wasn’t much interested in giving, but instead was totally fixated on what I was going to get from Santa on Christmas morning!

As I have grown older and more experienced, the idea of getting presents and gifts at Christmas has lost a bit of its luster. While I am always grateful for the actual physical gift, I am usually more pleased and delighted by the fact that someone thought enough of me to go out of their way to give me a present.  It seems a token of our relationship and caring for one another, and that is what I have come to value more than the gift itself.

More importantly, I have come to know and appreciate the wonderful feeling that comes from giving a great gift to someone I care about. It is the anticipation of doing something special and nice for someone I care about that I value most now.  When I have a really great gift to give my wife, kids, parents or a friend, I feel the same way I did as a kid – I just can’t wait for Christmas to finally get here, so I can see the surprise and delight of someone I really care about when they get a great gift. That feeling is now what makes Christmas a magical time for me.

A Season for Philanthropy

Many people think of the holidays as a time to be generous, and many families often step up their philanthropy and charitable giving during the holidays for the same reason – because of the great feeling we all get from doing something nice for another. This time of focus on giving and contribution can be a wonderful opportunity for families to become more proactive about their charitable giving plan, and to develop a “Family Contribution System”, involving all family members in your philanthropy.

High Impact families know that it is important to instill charity and contribution as a core value in the development of their children and grandchildren, and take an active role in involving future generations in philanthropy. There are many ways to accomplish this training and to establish this habit, from a Family Foundation to a Donor Advised Fund, to other informal structures.  However, the important ingredient is to make contribution and giving a “Family Affair”.  The holidays can be a wonderful time to involve your whole family – children and grandchildren – in your giving plans, and to focus on the wonderful benefits of contributing to the community around you.

The holidays may also be a time to make a resolution to be more proactive with your giving. For most people, charity and philanthropy happen in a reactive way.  A telephone solicitor calls us at the dinner hour asking for a contribution to the cause du jour.  A business associate asks us to lunch to make a financial commitment to support their pet cause.  Very often we allow ourselves to be committed to a small contribution, to buying a table at a gala, or to take a foursome in a golf outing because we feel obligated, even when we have no emotional connection or commitment to the charity in question.  How many of these causes for which we are solicited actually match up with the social issues that really matter to us most?  Very few, because reactive giving is about Someone Else’s Cause – We give reactively simply because we are asked, and because we don’t want to appear rude.

Building a Family Contribution System enables a family to become proactive in making commitments, and to reap the joyful benefits of making a difference with commitments that are meaningful to your whole family. Perhaps this holiday season is a time for you to consider building a proactive and thoughtful approach to giving that involves your whole family.

A Timely Opportunity

As a practical matter, this year may also be a good time to consider “stepping up” your charitable giving, thanks to some possible changes to the tax code which may be coming in 2017.

The incoming Trump administration has made it clear that tax reform is high on the priority list after the inauguration. Although it still remains unclear what exactly will change, there are two general proposals which may make it advantageous to consider charitable giving before the New Year:

  1. There is an expectation that tax rates in general are likely to come down. If this happens, tax deductions such as charitable contributions are more valuable in 2016 than they may be in 2017, as the deductions can be used against higher taxes this year than next.
  2. There has also been proposed that total itemized deductions will be significantly curtailed, and subject to an overall limit of $200,000 per year. As a result, taxpayers who are accustomed to writing off significant deductions annually may fund their ability to make tax deductible charitable contributions has been limited or eliminated in 2017 and beyond.

As a result of these possible changes, it may be wise to consider “stepping up” your gifting in 2016 before the year is out. For some clients who have made multi-year commitments to charitable giving, it may make sense to accelerate these gifts into this year to capture the deduction now.

Many clients have also considered the use of “Donor Advised Funds”, which is a mechanism which allows you to fund a lump sum charitable gift now, and take a current tax deduction for the gift. However the funds may be held and invested over several years, allowing you to make smaller annual gifts from the fund as time goes on.  For some, it may be wise to consider how much gifting you may plan to do annually over the next several years, and fund that amount now into a Donor Advised Fund, to secure the immediate tax deduction.  Then the actual gifts can be made annually from the fund principal, as you desire.

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About the Author:

Erik is one of the co-founders of Concentus Wealth Advisors and currently serves as the Chief Executive Officer of the firm. With over 25 years of industry experience, Erik guides the firm’s overall strategy. After graduating from Amherst College in 1991, Erik spent a year working with Rittenhouse Capital Management, before joining Gerald in 1992. Erik currently holds his general securities registrations and insurance licenses, as well as CERTIFIED FINANCIAL PLANNER™ and Chartered Financial Consultant designations. In addition to his formal designations, Erik has appeared on CNBC’s Worldwide Exchange, Fox News’ America’s News HQ, Live Well’s Mary on Money, CN8’s Money Matters Today and The Real Estate Connection. In 2012, Erik was one of thirteen advisors named to Main Line Today’s Top Financial Advisors list. Erik lives in Bryn Mawr, PA with his wife and three children. He serves on the boards of the Philadelphia Chapter of the Salvation Army, Acting Without Boundaries (serving young people with disabilities) and The Holy Child School at Rosemont. In addition, he is on the financial advisory board of the Sisters of St. Francis in Media, PA.

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