Season 14 Episode 24 | 26m 46s | Video has closed captioning.
Our discussion about how you can leave some of your assets to charity in your estate planning.
Problems Playing Video? | Closed Captioning
Season 14 Episode 24 | 26m 46s | Video has closed captioning.
Our discussion about how you can leave some of your assets to charity in your estate planning.
Problems Playing Video? | Closed Captioning
Northwest now is supported in part by viewers like you.
Over the next ten years, $47 billion worth of assets will be transferring from one generation to the next.
In Pierce County alone, the largest transfer of wealth in world history from one generation to the next is happening right now.
And over the course of the next few decades.
And perhaps no surprise, nonprofit are working hard to promote the idea that they need to be included in estate plans.
It's a campaign called Leave ten.
And that's the discussion next on Northwest down.
The Greater Tacoma Community Foundation is the connection point between many of this area's nonprofits and in the interest of transparency that includes K Btcc Public television.
The foundation estimates that the current net worth of all the assets in Pierce County is about $269 billion.
But while that number fluctuates up and down with the value of assets, its ownership fluctuates too.
As one generation passes down, wealth to the other.
And it's in that moment of transfer that nonprofits are promoting the idea of including philanthropy and estate plans.
10% to be exact.
As assets grow and time passes, the numbers start to get Astrovan.
Michael Over the next 50 years, the foundation estimates that almost half a trillion dollars will change hands right here in the South sound.
Joining us now to discuss the leave tent campaign are Evelyn Rehberg, co-chair of Leave ten South Sound, Rick Oldenburg, the executive director of the South Sound Plan Giving Counsel, and Jan Jacobs, the senior vice president of philanthropic client management at Bank of America.
Welcome, all of you to Northwest now.
Great to have a discussion about leave town and philanthropic giving and sustainability and a lot of the things that I hope we'll be able to speak about here in this program.
Evelyn, let me start with you.
I know that Leave Ten is a campaign that's focused on philanthropic estate planning, but start us for a feel about, if you would, what the big picture is.
What does leave ten do?
How does it fit in with partners like the Greater Tacoma Community Foundation, Foundation and South Sound?
Give us a feel for what it is.
Well, it's really like a movement.
It's a movement designed to educate and encourage and inspire individuals to leave charitable gifts, ideally at least 10% of their estate, if possible, to the charities and the causes that matter to them.
And for a movement to really take place, it requires partnerships.
And those partnerships can be with other nonprofit organizations.
It could be even with the professional advisor community, the estate planning attorneys and and wealth advisors and folks like that, as well as our giving public Greater Tacoma Community Foundation really embraced the whole concept of leave ten.
A number of years ago and started promoting it and supporting it in many ways and providing some tools and resources to the community.
But we also realized that in order for it to really take legs, that it required more relationships, more partners to to get it off the ground and to really get it out in the community and have that common message.
And leave ten is very punchy.
It's very marketable.
So it works.
Rick, talk a little bit about the South sound plan giving counsel.
You're another one of these organization that I think facilitates nonprofits.
You don't do it for them, but you help them out.
How do how do you guys operate and how do you relate to leave Town?
We're basically an educational and networking group.
We appeal to state planning attorneys, CPAs, trust officers, but a lot of nonprofit kids and a lot of non-profits are now moving into what we call planned giving, which is simple.
It's just gifts that are planned in advance.
One way or another could be a stock gift or a gift from a from a bequest, from an estate.
But basically, we try to put all of the pieces, all the parties together.
So when when a person sits down to try and figure out what they're especially if it's a large estate, what they're going to do with it.
They need an estate planning attorney, they need some financial guidance, and they're going to need to communicate with the nonprofits that they want to help as well.
So we are that bridge jam coming from Bank of America.
Obviously, this whole structure requires financial services either to retain and hold gifts to help help the various foundations manage their money, individual nonprofits manage their money.
How do you relate to all this and give me a feel for for what role the financial services industry plays?
And I spent 35 years as a fund raiser, so I'm on the other side of the dollar now.
I like to say helping to give money away.
But also, to your point, to manage endowment assets for nonprofits and to help individuals and families with their giving, whether that's immediate giving or long term giving.
So I've been involved with lead ten was on the founding board is I think all three of us were about a dozen years ago.
We started this because it can have such an impact on our community.
So I think there are three things really about legacy giving, as we call it, that are really important and interesting.
One, Americans are among the most generous people on the planet, right?
And yet fewer than 8% of Americans who have a will have included a gift to charity.
So there's a real disconnect there.
And imagine if everyone invested just a portion of their life's income back into the community.
What a difference that could make.
Yeah, yeah, yeah.
Anyone can answer this question, this little bit of a question about mechanics.
Who do you want?
The person who says, You know, I'd like to do this or I want to.
I want to do some giving.
Should they do?
Should their point of contact be the individual nonprofit that they're dealing with?
Should it be with one of the foundations, Greater Tacoma or South Sound or a financial institution?
Or are there multiple doors open for this?
How does that how does a person approach this?
Yeah, all three, all of the above.
All of the above.
And yeah, all of these are resources for individuals and hopefully they are having the philanthropic conversation with their financial advisors if they have one, and if their financial advisors not bring it up, they should bring it up.
You know, I think, Rick, we'll talk more about how important it is to have a plan.
Absolutely essential at the same time.
And I can see it now since I've gone from one side to the other.
It's really important actually, for donors who support a charity to talk to the charity.
We're settling a major estate right now at Bank of America, where a woman was on a board years ago of a nonprofit.
She cared very much about.
Her daughter, who she wanted to memorialize, was very involved with the charity.
But she has put such restrictions on her gift and she's passed away now that I'm not sure they can meet it and be able to accept that gift.
And it's a transfer missional gift.
So donors are sometimes, I think, afraid to reach out to the charity, but their lives would be so much more enriched if they stay engaged and have those conversations and make sure that the charity can meet their needs and what they want to do.
They love to do it.
It's really important.
Jane, through this to you, Rick.
So what kind of how how do you avoid a problem or I, I guess what are some of the traps and what are the some of the things you need to be thinking to make sure that that plan is executable according to your wishes?
First of all, is it illegal?
Is it set up on a legal way?
So a will is the basic starting point.
If you're talking about the mechanics.
But back to to Jan's point, if you are close to an organization, if you're a donor and you're close to an organization, you really need to talk to them.
And the reason you need to talk to them is exactly what you said.
I worked for an organization, a nonprofit here in town in Tacoma that turned down a bequest because they couldn't meet the strings that were attached to it.
Unbeknownst to them, they were an educational institution.
So it's very important to get that.
If I'm going to give you a gift as I'm a donor, can you deliver?
And is it something that you can do?
Can you actually do it?
And I hear this a lot from nonprofits, Jane.
You can address this, that a lot of times people and I think this is what you're gesturing at, one, a very narrow a very narrow use of their money in a very narrow mission or maybe something that's not quite within that nonprofit's scope, scope of service or practice.
So that's where the communication piece comes in.
But Jan, can you also talk a little bit about the importance of providing general dollars where I don't just you it's important to say I just wanted to go for this, but that nonprofit also needs to be able to operate, keep the lights on and do some things.
Talk a little bit about that.
And that's really unrestricted giving.
I mean, really, the organizations, they do, they have to keep the lights on.
They have to have infrastructure.
They have to pay their staff, they have to have databases.
They have to, you know, do so many things to just simply to operate and do the services that they provide.
And so where again, where you can remove those restrictions.
So critically important.
And yet, you know, you really need to build a trusting relationship with the organization that you're dealing with to know that those dollars are properly being spent.
But, you know, I can honestly say we've we have so much to be proud of, especially in our nonprofit community.
And the quality of organizations that are out there.
So our community should be very thrilled to be supporting what we have.
Yeah, but I think you make a very good point.
If that isn't drawn up correctly, if it's too narrow, too restrictive, you get this transformational gift and all of a sudden you're like, we just we cannot.
Yeah, we can't do that.
That's that would really be, I would say, very disappointing for both sides.
Yeah, right, Right.
So a gift will work much better.
And that unrestricted giving, especially coming out of the pandemic, is probably more important than ever.
And a lot of donors did, did realize that during the pandemic.
And started making more unrestricted gifts and that can that can really be a sea change.
I don't know what the community foundation was seeing.
That would be interesting to hear from Ellen, but it's been really important to to start making more unrestricted gifts and as you said, trusting the organizations that you believe in.
I'd like each of you to speak with this, but I'll start with you, Jean.
I'm sure it's very easy for the average person to say, well, I can give them cash and then they can take that cash and they can spend it.
Yeah, but is it just cash or and I know you could take a deep dive into the weeds, but is there assets, property?
What works for this?
Well, lots of things can work for this.
And that's such a good point because through legacy giving or it's sometimes called plan giving, it's really about giving gifts of assets, right?
So you can give so much more than a person can give through their ordinary income because most wealth is held in the form of assets like real estate or life insurance or personal property or investments.
So there are other things you can do.
Rick mentioned earlier making a gift of stock.
So it's a plan gift, a stock contribution.
And he's got a personal story that I'd love for him to share.
Well, yeah, Well, one of the things that has been opened up are what they call qualified charitable distributions from traditional IRA is proviso.
You must be 70 and a half in order to be able to do this.
So that RMD that required minimum distribution can be can go into this part, part of it up to $100,000 a year per person.
If you have more than one IRA, you can't go over the 100,000 in the aggregate.
But I've been telling people to do this for years and now I'm having to take my RMDs.
And last year I took my own advice and here's the situation.
My wife and I cannot give away enough money to exceed the standard deduction on income.
So you're not able to write it off.
Can't write it off If I give it as a qualified charitable distribution from my IRA, I don't write it off, but I don't count it as income even though I'm required to take it.
Money coming out of an IRA is 100% tax deductible.
But the money we gave to our church, to a college, to a local educational institution, to the hospital, all of that I won't have to pay tax on.
So it is the equivalent of a 100% tax deduction.
It really is.
If you're over 70 and a half and you're on a traditional IRA, we ought to be considering that if you give large amounts or any amount to institutions every single year.
Joanne, a piece I'd like to take for you to talk about as we talk about leaving ten, whether they be assets or cash or whatever it may be, I think the average person also thinks, well, here I'm a nonprofit.
You know, cases like Betsy, we get $10.
Well, we spend $10.
That's really not the goal, is it?
You work for the greater good come a community foundation.
Talk a little bit about what sustainability looks like in the context of this conversation.
Yeah, I mean, I think of Greater Tacoma is a great example of of endowment building and what we're able to now accomplish because of low down endowments.
But sustainability of an organization is so absolutely critical because it well for for the very reason it's sustainable.
An endowment is really a great pathway In order to help with that, I would say during pandemic, those organizations that had endowments were and much greater shape and able to manage their budgets and their their expenses because they had that reserve.
I want to explain that an endowment A that's the key word.
And B, it's a pile of money that is producing income for the organization.
So you're not just hand to mouth thing, there's an income stream.
You're also raising funds, but you've got that kind of baseline income stream, right?
So it is an income generator.
And and because of that, nonprofits can rely on that as part of their budget.
And so I think they're they're really not not every organization's going to be able to have and it may not make sense for some of the smaller organizations to do it.
But if there is an opportunity to take on an endowment, I think it's really for the better good of the organization.
And oftentimes an endowment will start with a planned gift.
It'll start with a major bequest gift from somebody.
And that is your your key, your starting point to to get one going.
And as Jan was talking about, maybe that's that one that's transformational.
Where the nonprofits leaders say, you know something, this lump is sufficient here to kick off income and maybe we approach it this way as opposed to building the next you know, let's let's stay where we are programmatically or pretty close, but now all of a sudden, boom, we have an endowment and we've got some sustainability and and it can be built over time, right?
Those small gifts add up to small bequests that come in, add up.
So I did work for Make-A-Wish, Alaska, in Washington for several years, which was founded right here in this community, as you might know.
And one of the things that we did there to help build the endowment was that gifts of bequests that came in and other planned give half of it went to immediate use to your point that help grant wishes and the other half went into endowment and we let people know that if they wanted to designate it one way or the other, they could.
But that was generally how it happened.
So we were able to build the endowment over time.
So here's the tough question, Rick.
I'm given a lump of money and I want to help them build an endowment, but I want to make sure that it's not just these local folks who are managing this money.
It's a portfolio.
It's complicated, as we have found out recently.
You know, bonds can go down in value, too.
So we talk a little bit about that management piece.
And what do you tell people who tell you, gosh, you know, I want to make sure that that they don't blow it or there's not a mistake made.
Well, and if it's established institutions such as a university or a private school or hospital, they have people on staff who are professionals and they handle the money and the investments.
If you don't have those things at your fingertips, one of the best resources in the community is the community foundation, right?
They do have those resources.
So if you're a small organization and you're looking to to try and build an endowment, maybe the first thing you do is have a conversation with the Greater Tacoma Community Foundation or the Seattle Foundation or down in the South Sound, the community foundation of South Puget Sound.
You talk with somebody who has the ability once, once you're into that, you'd want somebody in a professional manner to manage it.
So a lot of times trust companies will manage them.
A lot of times banks have trust divisions and there are some private institutions that do trust management as well that do a good job.
And I'm sure, Jane, you were very probably have a very hand-in-hand relationship with the trust management people in the asset.
That's what I do.
Basically, I'm a trust officer for all of our charitable accounts.
So whether that is an endowment or other assets that the nonprofit may have with us or family foundations or charitable trusts, which are among my favorites, you know, people that do leave everything to charity at the end, and then they might have discretionary grantmaking or they might have charitable beneficiaries perpetually that receive funds.
And those are really inspiring.
Jan Leve ten is one of those things that looks great on paper.
It's like, well, who would want to leave ten to their favorite nonprofit?
What's the problem?
Well, here come the kids defined benefit retirement plans have gone away.
Social Security is on the rocks We had the tech wreck and 911 and then the great financial crisis.
Now a banking failures.
I mean, portfolios in the next generation are okay unless you happen to be psychic and invested in Netflix and sold at the right time.
You know, hindsight's 2020.
How do you what is the argument for the next generation who's saying, gee, mom and dad, I don't know.
I'm not sure about this.
So you can all talk about that because I'm sure you've had those conversations.
Well, are you speaking from their ability to actually receive something from their parents estate?
That, you know, that 10% is going away.
Well, you know, it's really not a all or nothing kind of a proposition.
And we're really trying to say yes, take care of your family and consider leaving at least a small portion of your estate to your charitable causes and those things that matter to you.
And, you know, it's it's also an opportunity to pass on values and an opportunity to to, you know, show the next generation of how important it is to, you know, give back and pay it forward.
And those are really strong, important messages and that that can be taught through charitable giving.
And because this is a percentage which I like about this, particularly leave leave ten, you know, it's proportional with the size of the estate.
So you don't have to be a billionaire to leave 10%.
You can have ten grand and leave 10%.
That's a thousand bucks.
You know, the other thing that's kind of interesting is if you are a family and let's say a family of three kids and your leave, you're splitting your estate up between three children, they're going to live just as well as 30% to one does.
You know how that goes?
I do, right?
However, each could live on 30% or could do as well on 30% of the estate as they could on 33% of the estate.
It's not that big a difference.
So include the include the charity, include the community in your will.
It's a way to say, you know, I realized that that I didn't get here all on my own, but I didn't create the universities.
As Einstein said, in order to be totally self-made, you must first create the universe.
We didn't do all of this right.
So I didn't build the cities.
I didn't build the education or the hospitals.
People did that before us.
It's our turn to make sure we leave something behind for those who come after us.
Jane, I'm sure you've had these conversations with families, too.
So how do they go and how do you answer it?
Well, and again, I'm thinking back to what Rick just shared about making the the the donations from his IRA.
I think a lot of people don't realize that IRA IRAs are taxable.
If you leave them to your children, the children are going to have to pay taxes and now they have ten years.
Yet the rules on that has changed.
So so there's that, you know, and so leaving your IRA to charities that you love and care about is a really smart strategy.
And then the kids aren't left with the tax bill.
And I think they might appreciate that.
So there are ways to do this and also take care of your family.
Big, big picture question for you.
We're talking about the younger generation and not only the generation that stands to heard from either the greatest generation or the silent generation, which are kind of that group now coming down to, you know, boomers and even Gen Xers, you know, as as we go through the generations here, How what is the future of philanthropy?
And I know that's a huge question.
There's not enough beer on the table here for you to answer that question.
But are are what are you sensing that there is going to be a wave of philanthropy, are pulling back to philanthropy because of economic conditions?
What's your gut tell you?
You know, I think philanthropy has existed since the beginning of time, and I think it will continue to exist in some way, shape or form.
We love our fellow human beings.
And, you know, unless something really, really changes on this earth to make people not care, I truly believe that philanthropy will play a role in all of our lives.
MM What what are your thoughts about that from a generational perspective?
Because I know you're dealing with it right now.
I, I will tell you this.
With every survey that's been done by outstanding organizations, BNY, Mellon, U.S. Trust, all of these institutions, when they come back and they say, what do taxes what part do taxes play in it?
Taxes are minor compared to the reasons people give, the reasons people give or from here, not from here.
And they they get a they have an emotional connection somewhere.
I don't see that it's going away.
It may lessen during bad times, it may increase during good times, but it's not going away.
It's never gone away.
And it's part of our American culture, Right?
American are among the most generous people on the planet.
The World Giving index last year showed that 59% of Americans either helped a stranger who needed help, gave money to charity, or they volunteered at an organization.
So we're always within the top.
It's one of the top two in the world for charitable giving because it's just it's part of our culture.
It's part of who we are.
So I agree.
I don't think that that's going away.
But 2 minutes left here.
And one last question I wanted to get in before we talk about how to get involved is, is the black tie.
This is probably a question for nonprofits, but you guys deal with so many.
I think I'm safe to ask you this is the black tie event thing kind of going away in the digital age.
How what's the best way to get this done now?
What are you advising your nonprofits about how to do outreach?
Jane, you're shaking your head like it's a joke.
I mean, you're shaking your head like it's embarrassing.
I haven't seen it go away.
And I honestly don't think it totally will, at least not not to.
I think people are actually craving to kind of get back together and have some of these events.
And, you know, it's a celebration of being able to help your community.
And so so not only are people sharing dollars, but they're sharing, they're sharing emotion, they're sharing joy, they're sharing their happiness and their ability to to give back.
And these are wonderful occasions to do it.
So I think we're going to still see some of those happen, although the digital challenge, the digital playing of it has to be part of it because digital giving is up, there's no question about it.
And even in plan, giving the latest statistics from a group called Free Will, where you can go online and create a will, they've created an incredible number of wills since their inception in 2017, and they're supposedly legal in every state.
There will be attorneys to tell you that there are some problems with some of them.
But by and large, any will is better than no.
Well, yeah, words to live by and a good way to end it.
Last question for you.
Anybody can blurted out, how do people get involved if they want to jam?
Jam go ahead how do they leave town dot org slash cell sound.
One thing I want to point out is there's a ton of tools and resources on that and our website and through our program to support nonprofits as they build out their plan, getting programs to last second pitch there.
Thanks so much, everybody.
The generation of people in their eighties and nineties right now have kids who may very well not live as long as access to medical care recedes.
The bottom line, a two generation transfer of wealth could happen in a relatively short succession in the next 20 years, and nonprofits are hoping the philanthropic impulse could be stimulated to build long term legacies for everything from housing to the arts to media, and to anything else that improves the quality of life that tax dollars just don't cover.
I hope this program got you thinking and talking to watch this program again or to share it with others.
Northwest now can be found on the web at kbtc.org.
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Now, a streamable podcast of this program is available under the Northwest now tab at kbtc dot org and on Apple podcasts by searching Northwest.
Now that's going to do it for this edition of Northwest Now until next time.
I'm Tom Layson and thanks for watching.