Stock money philanthropy

For some, giving philanthropically can be easy and done without a second thought. For others, the interest may be there, but giving can be difficult without prior planning.

According to Rachel Lappen, chief development officer at the Jewish Federation of Cleveland in Beachwood, and Judith Shenkman, executive director of American Friends of Hebrew University Midwest Region in Chicago, budgeting for gifts can make philanthropic planning easier.

“Nonprofits rely on charitable donations to provide programs and services to the community,” Lappen said. “At Federation, for example, the gifts we raise go directly to the community, agencies, overseas and security. None of that could be done without philanthropy – it guides all of those activities and programs. So, people should be thinking about how they can work that into their lives on an annual basis.”

Shenkman explained in addition to tax benefits, being philanthropic allows people to “pay it forward” and make the world a better place. Planning for these gifts allow people to do it more effectively, she said.

“By making our philanthropy part of our annual budget, we’re doing that,” she said. “And by taking advantage of tax incentives for charitable giving, we are reducing our annual tax costs, thus, reducing the net costs of our charitable gifts.”

In terms of how individuals can build these budgets, the professionals had some advice.

“The strategy individuals use to set aside funds for their annual charitable giving is by periodically making contributions to donor-advised funds,” Shenkman suggested. “For individuals over ages 70½ or 72, making gifts annually from their IRAs allow for required minimum IRA distributions to be withdrawn tax-free. Doing so removes these IRA withdrawals from adjusted gross income, likely reducing taxable income, and, perhaps, reducing one’s tax bracket.”

Lappen suggested individuals also prioritize their donations, figuring out how much one feels comfortable donating each year.

“I suggest people look quarterly at how much they have budgeted for philanthropy throughout the year,” she explained. “Some organizations offer automatic monthly payments or payroll deductions, which are easy ways to not even feel the burden of the funds. Of course, another great way is to put aside funds is a

donor-advised fund. This retains the privilege to makes recommendations, takes the burden off people and helps them realize their philanthropic vision.”

Both professionals noted there are methods and assistance in place to help donors budget for gifts.

At AFHU Midwest, Shenkman said members of the fundraising team can work with individuals to plan for gifts.

“Where individuals have specific interests in mind such as scholarships for needy students, we can work with them to identify needs, particular areas of study and help them set up designated or endowed funds,” she explained. “The yearly gifts may be part of their plan for long-term support of the work of the university.”

The Federation’s professionals work to create plans that fit a donor’s charitable mission, Lappen said.

“Whether that is different vehicles of philanthropy or involving multiple generations, we want them to be able to transition to a cohesive and thoughtful philanthropic endeavor,” she noted. “That helps us deepen those relationships too, and guide them through their philanthropic journey.”

For well-versed donors, these tips may be old news. But for new donors, both Shenkman and Lappen had advice on approaching this process with no prior experience.

“We’re here to partner with donors to ensure making philanthropic decisions is a meaningful experience,” Lappen said. “We work with individuals to realize the vision they have with their philanthropy. There are lots of ways to give, so we want people to feel comfortable with those choices.”

Shenkman said, “It’s important to become a partner with the charities you want to support. Beginning slowly with even modest contributions and building a relationship with the organization are important steps for individuals who are beginning to explore including philanthropy in their strategic planning.”

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