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Financial Planning > UHNW Client Services > Family Office News

15 Questions to Guide Family Charitable Discussions

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Clients who discuss their annual charitable planning with their families over the holidays often have similar conversations from year to year. This year, however, may be very different.

The shock of the pandemic and the economic impact have caused some donors to deviate from their usual giving practices. Many responded by supporting their favorite nonprofit organizations while others also donated to different or local charities. The American Endowment Foundation and most other donor-advised fund (DAF) sponsors reported that in response to the great need that arose in the first half of the year, the number of grants recommended by their donors increased by 35% to 50%.

Related: Top 3 Trends in Charitable Giving and Why They Matter

Due to travel concerns or limits on the size of gatherings during this year’s holiday season, families may be separated instead of together. Fortunately, planning discussions can still take place via video conferencing if in-person conversations are not possible.

Each family situation is different. Some family members may wish to continue to support the same organizations that they have always supported, while others may want to change direction. Others who previously never expressed much interest are now far more aware and will want to participate in the discussion about charitable giving.

Because this is also an election year, feelings and emotions can be more elevated than usual. Though there may be differences, philanthropy can help to keep families united.

Families typically want to have this discussion themselves, but it can be beneficial this year to include one of their professional advisors who is knowledgeable about charitable giving. There have been many changes to the tax implications of charitable giving in recent years including this year’s CARES ACT, so talking with their advisor before or during the meeting can be very helpful.

Related: Tax Planning in an Election Year

Some questions that families may wish to answer this year include:

  1. What is the history of philanthropy in the family?
  2. How important is philanthropy to each family member?
  3. Which causes and charities are most important to family members, and do they deserve more or less support this year?
  4. What is the timeframe for giving? Should they give now, throughout their lifetime, or in perpetuity? Determine whether annual donations should be made earlier since needs exist throughout the year.
  5. Should donations be made as a family or separately?
  6. Does the family want to be private or public with giving?
  7. What are the best ways to get involved: volunteer or join a board, visit organizations or projects, donate, or advocate for organizations with friends and colleagues?
  8. Which family members will participate in planning now? Has this year motivated anyone to get involved for the first time?
  9. Who will lead family philanthropic efforts in the future and perhaps in the next generation?
  10. How much should be donated this year? Should additional grants be made at year-end in addition to the grants made earlier in the year?
  11. Which, if any, family assets (i.e., real estate, family company’s stock, collections) should be donated to a charity or DAF, especially if nobody in the family wants these assets in the future?
  12. Should the family meet with advisors to determine the most tax-efficient way of giving this year, to educate family members, or to create a charitable vehicle that may be most appropriate?
  13. Should current family charitable vehicles still be used, or are there less complex and less expensive options available?
  14. Should charitable beneficiaries be named in the estate plan or should a DAF be named as the charitable beneficiary of an IRA to avoid significant taxes?
  15. What is the impact of the family’s philanthropic efforts?

Because of the challenges family members and society have recently faced, this year’s charitable planning conversation may be more important and relevant than ever before. This may be the ideal opportunity to engage children or grandchildren who have not previously been interested.  Advisors can be very helpful for families that want to plan how, when and how much to give.

Though it is already late in the year, making grant recommendations as early as possible is very important this year. Due to COVID-related restrictions or impacts, some charities may have limited hours or availability and would like to receive these year-end grants as soon as possible. The challenges many face this year are substantial, yet the opportunities for philanthropic families to make a difference are great as well.

Ken Nopar is the vice president and senior philanthropic advisor for the American Endowment Foundation donor-advised fund. Founded in 1993, AEF is the sixth largest and the leading independent DAF sponsor, working with 10,000 donors and their tax, wealth, and legal advisors in all 50 states. 


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