Share The Wealth
Suit Your Financial Situation While Helping Others
 
Tis the season to put down the shopping bags, open the wallet, and share some wealth with those in need.

Of course, giving money to charity this year could be harder than ever before with mounting economic challenges. But with the right planning, an option can be chosen to best suit donors’ finances, time, and, perhaps more importantly, their favorite causes.

There are so many options for giving that the process may seem overwhelming at times. Advice from professionals can be essential in determining what will work the best.

The Ways of Wills

Wills are a traditional option for transferring wealth to charitable causes. Mike Cooney, an attorney at Dinsmore & Shohl, says wills are one of the simplest ways to transfer wealth. Other than requiring someone to prepare them, wills are easily created and changed at any time in a person’s life.

“During life, someone’s desires and circumstances could change when it comes to charity, and wills are flexible in changing their wishes,” Cooney explains.

Matt McCormick, a vice president and owner of Bahl & Gaynor Investment Counsel, says that wills are a solid option for ensuring a person’s wishes are followed. They make last wishes unmistakably clear to everyone involved.

“However, circumstances, wishes and people all change,” McCormick warns. “You have to update wills every year. Goals might have to be altered. Stay on top of the situation and make sure everyone is on the same page.”

Once someone actually dies, the beneficiaries and executor of the will have to go through the probate court process. This is a way for the executor to explain to the court and beneficiaries how the assets are to be spread.

“This could be considered a disadvantage of wills,” Cooney says. “It takes time, people can claim to be owed money from the will, and some expenses will be added — taxes, compensation for the executor, legal fees and court costs.”

Creative Trusts

Trusts are a good option for people who want to avoid the probate court process and certain taxes. Leon Loewenstine, managing director and chief investment strategist at Riverpoint Capital Management, finds trusts to be a better option for some people. He thinks that for those who want to leave a legacy, it’s best done while they’re still alive.

He says wills are a good option for those who might end up needing the money for other purposes during their lives. On the other hand, donating the money while alive is also a way to avoid paying income taxes. No matter which way you decide to give, estate taxes are not required on these monies.

“Another reason I would encourage people to donate while they’re alive is that you get to see how the funds are used,” Loewenstine adds. “You can get the satisfaction from what you’re giving by helping others. You can see the good your contribution brings to the community.”

While donors are living, they can give charitable gifts by putting money into a trust. Two main trust options are available and can be chosen depending on what return you wish to receive. The first type is called a charitable remainder trust, which is set up to pay an income stream to the beneficiaries (usually family members) every year. When the donor dies, the remainder of the money is given to a charity of the donor’s choice.

If the donor would prefer to leave the money to beneficiaries, they may consider charitable lead trusts. These pay money to a charity over the donor’s lifetime, and then transfer the remaining money to the beneficiaries when the donor dies.

Loewenstine recommends that potential donors ask a series of questions before deciding the right type of trust for them: Do you want a high payout? Fixed payments? Dependence on market values?

Also, donors don’t necessarily have to put cash in their trusts — assets such as stocks can also be used. It is more beneficial to put in assets that will appreciate in value. However, with the poor economy, stocks might not be the best option.

“If an individual has a loss on a stock, they shouldn’t give it to charity. Instead they should sell it and consider giving cash instead,” Loewenstine says.

Other Options for Giving

Donor-advised funds and family foundations are alternatives for those with significant amounts of wealth to give. A donor-advised fund is set up with a charity, which can then disperse the funds among other charitable purposes.

“The money can benefit different charitable causes from year to year, but the donor has input on where it goes,” Cooney says.

Family foundations are similar, but the donor family has more control over the use of funds. However, Cooney suggests that they are weaker alternatives to donor-advised funds because they are more expensive to run, require the filing of extensive tax forms, and don’t have the benefit of a large pooling of funds.

Mark Reckman, senior partner at Wood & Lamping, recommends giving retirement accounts to charity upon death. If given to someone else, the recipient would have to pay income and estate taxes, but it would not be taxed if given to charity.

Reckman also believes in using charitable giving as a tool for teaching children, as his family has done for years.

“It’s a great way to show children that giving to charity is a good thing and lead by example,” he says. “Tell them they can pick a cause for the money. It could be religion, animal rescue, environmental conservation, any family value.”

Things to Consider

One of the most important parts of the donation process is deciding what types of charities to support. They could be charities that give personal satisfaction or ones that simply need the most help. After choosing a cause, the next step should be to speak to a professional accountant, attorney or investment adviser to see how much money can be given, over what period of time, and what strategies will work the best.

Loewenstine says the economy has affected the planned giving market, but not as much as some might think. Many charities are still receiving money from donations.

“Charities that have stayed close to their donors and informed them of their missions and goals have not seen much of a drop-off. They’re in a much better position than charities who have stayed distant,” Loewenstine continues.

Chris Owens, the director of development for People Working Cooperatively, agrees. Her organization has made an effort to stay in touch with donors via the phone, mail, internet and social media. PWC provides home repairs and services to low-income, elderly and disabled individuals. The organization makes sure donors know the stories of the people they help and how many individuals are on the waiting list for services.

“If people really don’t have money to give this year, we are always in need of volunteers. Time and skills would be very valuable,” Owens says. “We’re serving a very low income group making under $13,000 a year. If those of us with jobs and steady incomes are hurting, imagine how they’re doing.”

The United Way has also seen a drastic increase in the need for services, says president Rob Reifsnyder. The organization’s 211 phone number, which receives service requests, increased its calls by 34 percent in 2008 and a similar amount so far in 2009; about 40 percent of these people had never requested services in the past.

“We had to make the economy’s impact come alive (for potential donors) and show its effects on individuals in the community and nonprofit agencies. Agencies have had an increase in need while experiencing a decrease in funds,” Reifsnyder says.

Wendell Mettey, founder and president of Matthew 25: Ministries, sees an expanding need in poorer countries. Mettey, a former pastor, started M25M to collect, sort and distribute goods from individuals and corporations, and then send them to needy parts of the world.

“It’s said that when the U.S. sneezes, South America gets influenza,” Mettey says. “Basically, when the economy affects us, there is a ripple effect throughout the world.”

In order to aid these ailing areas, M25M relies on charitable giving. To stay in contact with donors, the organization provides a compelling web site, hosts events and fundraisers, sends mail and uses software to track giving patterns. This strategy has worked well for Cincinnati-based M25M, allowing the organization to connect with donors from across the United States.

However, Mettey says that smaller donors who might have given $50 last year are giving closer to $10 now. Some larger donors have stepped up in an attempt to offset losses.

The market situation might not appear to be a good point to make donations — financial assets and home values have declined while unemployment has risen. The combined effects can be discouraging to potential philanthropists. When one considers the current low interest rates, it is actually a good time to give for those with enough funds.

Cooney sees that charitable lead trusts are the most beneficial from this standpoint. Because donors’ funds start with a low value, it is easier to anticipate those assets appreciating in value by the time they are given to the beneficiaries.

Cooney also sees two main trends with planned giving this year. First, people are being more careful with their money. Potential donors are also witnessing a greater need, especially in basic necessities like food, clothing, shelter and medical care. Luckily, Cincinnati is a community focused on charitable efforts.

“I think we have one of the most generous communities in the country,” Reifsnyder says. “But there’s always room to grow.”
 



Charitable All-Stars

As a part of our annual guide to charitable giving, we’re recognizing exceptional Tristate leaders who lend their time and resources to the nonprofit sector.
 
 
Dick Adams
Retired
Procter & Gamble

In 2009, Dick Adams marks an important anniversary — his 20th year of consecutive giving to Episcopal Retirement Homes. Adams joined the board leadership of the Marjorie P. Lee Retirement Community in 1985. A retired Procter & Gamble employee, he has provided invaluable insight in finance and investment matters, including raising funds for capital improvements at all three ERH campuses in Cincinnati. Adams became involved with ERH through his father-in-law, Robert Adair, who was a founder of the organization in 1951. Adams and his wife, Lee, continue a legacy of enriching the lives of older adults, generously giving their time, talent and treasure.



Michael Brandy

President
Brandicorp

Michael Brandy is president of Brandicorp, a real estate development and management company located in Northern Kentucky. He has served as chairman of the board of Matthew 25: Ministries since 2001 and is involved in many decisions regarding policy, programs and projects for the ministry. Brandy has funded M25M facilities, donated a 20-foot box truck, and provided research and consulting services in the search for the organization’s current facility. He gives food and beverages, and his time and talent, in addition to generous financial contributions. Brandy is also a deacon at his church, Mount Washington Baptist, where his father, the Rev. Michael Brandy, was senior pastor.



Carrie Hayden

Community Leader/Volunteer

Twenty years ago, Carrie Hayden started volunteering with the United Way of Greater Cincinnati to engage in leadership training for local high school students. To this day, one of her biggest goals is to help youth succeed. Hayden is currently the chair of the United Way Foundation and is a past chair of the United Way’s board of directors. “United Way was the one place where businesses, government and nonprofits came to work together. I thought that synergy was really powerful,” she says. Hayden is also a co-chair of the Cincinnati Cancer Consortium, a board member of the University of Cincinnati Foundation, and a sustaining member of the Junior League of Cincinnati.



Kurt Reiber

Senior Vice President
Asset Recovery Group, KeyBank

For 14 years, Kurt Reiber has given his time and talents to the Freestore Foodbank. He started in the Client Services Division and joined the board a few years later. Now, Reiber is going into his fourth year as chairman of the board. “The mission to end hunger and reach self-sufficiency though outreach to the community is really second to none. They really do a great job of helping those less fortunate,” Reiber says. He has helped to develop Freestore’s Medicaid Outreach Program, as well as a mobile food pantry to serve rural counties. Reiber is also the president of the Forest Hills Foundation for Education and has served as the vice president of the board for the Hamilton County Special Olympics.



John Silverman

Managing Partner
Midland Atlantic Properties

John Silverman joined the board of trustees of Talbert House in 2003 and has since become its chairman of the board. He works on Talbert House’s Fatherhood Project, and this year is chair of the Fatherhood Celebration Luncheon that honors fathers in the community. “It’s important to the community and to me to teach men how to be better dads. It’s an effort to stop the cycle of violence to kids. A lot of them have not had a father figure in their lives,” Silverman says. He also serves on the boards of The Seven Hills School and the Cincinnati Council on Child Abuse, and is the president of Halom House Inc.



Mike Viox

President
Viox Services
 
Mike Viox started working as a carpenter years ago before translating his skills into facilities management company Viox Services. As a nine-year member of People Working Cooperatively and now the board chair, Viox not only offers administrative and financial support, he’s also willing to get his hands dirty. “I get groups together to build decks and do other projects,” Viox says. “We take pride in challenging jobs. I’m in touch with both sides of it. I get to meet the people we’re helping and be around other volunteers.” Viox is also the chairman of the board for Roger Bacon High School, and is the vice president of the Saint Bernard Community Involvement Corp.