“No one has ever become poor by giving.” – Anne Frank

On Sept. 5, we observe the International Day of Charity, a powerful reminder that generosity isn’t just about giving but also about sharing values, building a legacy, and fostering human connection. We touched on charitable giving in past newsletters (June and October 2024). This edition, we’re taking a deeper dive into how giving can go beyond writing a check and can be a way to unite your family, pass on your values, and create lasting purpose.

Passing on Purpose

Many of my clients use charitable giving not just as a financial strategy, but as a way to instill values, bond with adult children, and create a legacy that stretches across generations. It’s not uncommon for family vacations and weekly dinners to fade once children grow up and move on. But imagine replacing those missed connections with something deeply fulfilling, like sitting down together to decide which causes your family will support through a Donor Advised Fund (DAF). These funds, offered through financial institutions like Schwab and Fidelity or charitable organizations like the California Community Foundation, allow you to create a dedicated charitable account. You donate to the fund, receive an immediate tax benefit, and then make recommendations, often alongside your children, on which charities receive grants. While technically, the fund administrators have the final say, your recommendations are generally honored as long as they align with charitable standards. Building a Lasting Legacy With the Right Planning Donor Advised Funds are flexible, but they do have limits. You can name a successor to manage the giving after you pass, but in many cases, that successor can’t name their own successor. That means the legacy might only last one generation unless the remaining funds are used up or default to the fund’s main charitable pool. That’s where family foundations come into play. Though more complex to set up and manage, a family foundation, often structured as a nonprofit corporation, can last indefinitely. As long as future directors are named, the foundation can evolve alongside your family, adapting to changing charitable landscapes and staying relevant through future generations.

Giving Isn’t Only for the Wealthy

It’s easy to get overwhelmed by stories of mega-philanthropists. Bill and Melinda Gates, for example, have committed the vast majority of their wealth to their foundation, with only a small fraction going to their children. While admirable, this scale of giving can feel unrelatable. But you don’t need billions to create a lasting impact. Most private foundations are founded with less than $10 million, and many Donor Advised Funds are started with much smaller amounts. Whether you’re inspired by the Gates Foundation or moved by the work of the Michael J. Fox Foundation or the newly launched Matthew Perry
Foundation, the message remains the same: Giving back isn’t reserved for the ultra-rich.

Using Charitable Giving as a Tool for Taxes

Many financial perks come with giving wisely. Donating appreciated assets, like stock, through a DAF or foundation means you avoid capital gains tax, and the charity gets the full value. It’s tax-efficient, but more importantly, it’s intentional. So, take a moment to reflect not just on what you can give but also on how and why you give. Maybe this is the year you turn your family’s generosity into something structured, sustainable, and shared. At the end of the day, charity is about more than money; it’s about connection, compassion, and creating a legacy of love.