1. Charity begins at home… how do you define “home?”
Non-traditional philanthropy
Charles M. Barber
The Luzerne Foundation

2. Charitable giving agenda
Why?
How?
Where?

3. “I worked really hard to make it”
“… we’re talking REALLY hard …nights…weekends…holidays… ” “Now you are asking me to give it away?!?” “Are you nuts?”

4. “Where do you want your estate to go tomorrow?”
CHOOSE ANY TWO:
Family
Taxes
Philanthropy
Who gets to spend your dough?
You? Or the government?

5. Giving statistics in the United States
One of the richest nations on the planet, yet for high net worth households (assets >$1M not including their home) :
45% give < $2,000/yr
6% give $0

6. The best things in life aren’t all that expensive
House
Car
Vacations
Subscription to Fortune
Replay/TiVo box
Private jet
Assets for guaranteed income for rest of your life
So now what?

7. So we had a choice... Sit on our assets or
Put those assets to work in a way that will benefit:
ourselves
our kids
future generations of our family
our friends and community

8. Why it is better to donate to charity sooner than later
No tax advantages to giving after you are dead
No personal satisfaction to giving after you are dead
Giving can ultimately benefit you and/or your family
deviated septum presbyopia hair loss snoring lactose intolerance psoriasis receding gums near sighted torn ACL type I diabetes macular degeneration ringing in my ears

9. Example Ten years from now, you might be diagnosed with:
Heart disease/stroke
Cancer
Macular degeneration
At that time, starting a giving plan will be too late to have an impact on your health
In hindsight, would you think keeping your assets sitting in stocks was the right move?

10. Virtually all who try philanthropy stick with it
100% donor satisfaction at The Luzerne Foundation:
No donor advised endowment funds have closed (except if the donors move)

11. Giving need not be altruistic
Can be totally pragmatic
Example
We give because we get a higher return on our assets
Our one-time $50K donation may help cure cancer, diabetes, or arthritis; save the world; save the environment; etc.
Was that a good use of $50K? Or should I have invested it in stocks? For whose benefit?

12. Giving need not be altruistic
Or giving can be in your self-interest
Example: donate to causes that affect or may affect you or your immediate family
aging research
heart disease
asteroids

13. Giving may actually save you money!
Example:
You donate to a CRT when your stock is locked up at $50
Trust can short other shares to lock in the gain
Trust pays you back your donation over time
Result:
You can actually end up with more money in your pocket than if you sold that stock at $25 in a selling window

14. “Why Give?” Summary
We DO give to make a positive difference in our own lives and the lives of people we care about.
We DO NOT give not out of a sense of obligation or payback or civic duty or because it is “the right thing to do” or “to create a legacy”

15. Agenda
Why?
How?
Where?

16. Giving survey Would you rather donate: your own money
someone else’s money

17. Giving options
Charitable Lead Trust (income to charity now, later assets pass to heirs)
Charitable Remainder Trust (income to you now, later assets pass to charity)
Donor advised fund
Supporting organization to a community foundation
Private foundation

18. Which option? Smart estate uses a combination
CRT: Secure income stream for you
CLT: Pass money to your heirs
Donor advised fund: Under $1M assets; minimizes tax bite and maximizes charitable giving
Supporting org and/or private foundation: >$5M in assets; you can influence investments and donations

19. Easiest way to donate
Gift appreciated stock to a donor advised fund at local Community Foundation (typically $10K - 25K minimum)
* them whenever you want to make a grant
After you make the donation, you spend the rest of your life giving away someone else’s money!
* For any progressive community foundation

20. Charitable fund advantages
You can add stock (and liquidate) when your stock is locked up
Can donate to fund when stock peaks; decide on recipient later
Gift to charities at anytime from the fund
Less hassle (no personal recordkeeping, no periodic stock transfers, donations)

21. Advantages of charitable fund
Endowment compounds tax free forever
You get to give away an infinite amount of OPM and your annual grants will typically increase each year
All this from a ONE-TIME donation!

22. Carnegie Foundation Donated $5.2M 100 years ago
Built 65 public libraries
Still in operation today

23. How to donate to charities when your stock is locked up
Your stock seems to always peak when you are locked up… but...
You donate the stock; the charity shorts other shares
Allows you to give charity lots more money AND gives you a bigger write-off
Typically done through a community foundation

24. Hypothetical example You start an Internet music company
At IPO, you are worth $2.5B, but you can’t sell any shares
So you donate 1% ($25M) to a charitable fund
You get a nice write-off and can make donations to your favorite causes for the rest of your life without an additional investment

25. Make periodic small donations as your stock rises
Giving strategy
Make periodic small donations as your stock rises
Many notable philanthropists regret not having taken advantage of this strategy. Don’t make the same mistake.

26. The Luzerne Foundation
$38M assets
350 funds
$5K to $5M

27. Charitable Giving Idea
Identified areas we thought were important for ourselves, our kids, our friends: environment, education, medicine, ...
Started with a donor advised fund at my local community foundation
Added to it over the years
Maybe switch to a supporting organization so you could invest assets more aggressively

28. My recommendation Start NOW with a small donor advised fund
Add to it as you become comfortable with the results and as your estate grows
10% of your net worth after taxes is a good starting amount

29. Agenda
Why?
How?
Where?

30. Traditional philanthropy
Donate to American Cancer Society, United Way, public TV, etc.

31. How to give intelligently
Figure out the areas important to you
Create your own criteria (I have 20)
Make a long term commitment
Realize that results are often hard to quantify
See our website for details:

32. How we give Saving the world (NEOS, Ploughshares)
Encouraging philanthropy (talks, website)
Environment (we own two EVs, AB71, NRDC, EV tax credits, solar vehicle)
Fixing what is broken (knee surgery advice, stem cell ban, restoring historic structures, etc.)

33. How we might give
Medical research projects (diabetes, bridge funding gaps)
Medical sponsorships (3 yr; $50K grants)
Local (Tech Museum, AMTSJ, library, …)
Education (PSU, people skills)
Misc. (Mars Society, Buzz Aldrin, …)
Socially responsible investing (Mother Theresa)

34. Curing cancer
Invested $2M in a “for profit” startup doing cancer cure research
We can’t lose!
FAILURE: supported research; superior tax deduction to a charitable donation
SUCCESS: Cure cancer, win Nobel prize, save millions of lives, get a big capital gain

35. Why donate $2.5M to PSU? Practical reasons:
Someone there is going to invent something that will make a big difference in our lives, or lives of our children
NOT because:
Sense of obligation (“payback”)
Altruism

36. Donor Advised Fund Vs Private Foundation

37. Why donate $2.5M to PSU? Practical reasons:
Someone there is going to invent something that will make a big difference in our lives, or lives of our children
NOT because:
Sense of obligation (“payback”)
Altruism

38. Summary
While your reasons for giving may vary, it makes sense to start a giving program now
Easiest way to get started is set up a donor advised fund at a community foundation
It’s as easy as opening a bank account, a lot more fun and satisfying than doing the rest of your estate planning

39. Summary
The time to give to many causes is NOW, before they create a problem for you or a family member or your community

40. Survey
How many of you have I convinced to setup a donor advised fund or to begin/expand your own charitable giving?
If I haven’t, why not?

41. THANK YOU! For more info