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Is this Charity Plan Selfish?
Old 02-06-2008, 02:22 PM   #1
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Is this Charity Plan Selfish?

Let's say that instead of giving, say, $2,000 to charity each year, you put that $2,000 in particular mutual fund account, with instructions in your will that the contents of that account should go to a specified charity.

The advantages of this system are:
  1. If you miscalculated your retirement funds, you will have a backup
  2. The charity will probably get more, since you are a better investor than they are
The disadvantages
  1. The charity may not get any money from you for 40 years.
  2. Yet another mutual fund to keep track of
What do you think?
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Old 02-06-2008, 02:29 PM   #2
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I think it is an excellent way of doing things.
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Old 02-06-2008, 02:32 PM   #3
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T_AL.....

I don't know whether your plan is "selfish" or not or even what "selfish" means in that context. You're really talking about two levels of generousity. I'd just say that if using your plan I'd miss the nice warm and fuzzy feeling I get from giving in the present and I'd also miss the tax deduction. So, I do a little of both. I give now and I have charitable causes mentioned in my will.

Whenever you give, it's great you can afford to and even more so that you're willing to!

I'd describe your plan as "cautious" rather than "selfish."
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Old 02-06-2008, 02:33 PM   #4
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also disadvantages: no immediate tax deduction, you pay distributed capital gains (obviously avoidable), part of your assets in divorce or college funding calculations for children, can't take advantage of giving appreciated investments, no immediate impact for charity.

Some of these can be mitigated by using a charitable remainder trust but they have disadvantages as well.
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Old 02-06-2008, 02:35 PM   #5
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Its your money: do with it as you see fit.

How about a charitable gift annuity? You hand over appreciated assets in exchange for a tax deduction and a stream of payments for life. The charity keeps what is left.
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Old 02-06-2008, 02:38 PM   #6
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I believe any charity would want it now because without it they may have to cut services for that year.

That being said, giving, no matter how it's done is never selfish.
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Old 02-06-2008, 02:39 PM   #7
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Its your money. When they get it they get it.
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Old 02-06-2008, 02:48 PM   #8
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While your proposal is admirable, the charities I worked with always needed money in the "here and now", particularly when the economy is hurting. And wouldn't you like to know that your contribution is helping someone right now?

Of course, if you'd prefer to have your gifts be ever-lasting in helping that charity, you could always designate it for the charity's endowment fund -- and still get your immediate tax deduction. You might even challenge the charity to find matching funds for your gift (I'll give you an additional $xxx if you raise $XXX by 12/31/09, for example) to give more incentive to the group's other givers.


But know that however you chose to support whatever charities are close to your heart, ultimately, they will appreciate it deeply.
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Old 02-06-2008, 03:02 PM   #9
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Aren't you then giving up the tax deduction that way?
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Old 02-06-2008, 03:26 PM   #10
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To play devil's advocate, it's selfish because it's saying "Here's some money for you, starving children, but only if I don't need it."
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Old 02-06-2008, 03:32 PM   #11
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Quote:
Originally Posted by TromboneAl View Post
To play devil's advocate, it's selfish because it's saying "Here's some money for you, starving children, but only if I don't need it."
Few people give money they need to charity.
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Old 02-06-2008, 05:14 PM   #12
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my feeling is that all acts are selfish in that we do for our own pleasure including self-sacrifice. some selfish acts benefit others. some of those we call selfless but it is just a play on words.

delaying the pleasure of giving is not unbefitting of a lbym's lifestyle. as to non-anonymous giving, i've listed some of what i consider worthy causes as partial beneficiary of ira accounts which i'll probably tap last if at all so they will benefit from my lbym lifestyle in a timely lbym's way. patience is a virtue for charity too.
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Old 02-06-2008, 06:01 PM   #13
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Aren't you then giving up the tax deduction that way?
Not sure this was addressed to my post about contributing to a charity's endowment, but if it was, the answer is you're still entitled to your tax deduction because you've still passed control of your asset to the charity and received nothing of material value for it.

You can designate your charitable funds to be used for programs or administrative expenses or endowment or scholarships or whatever -- just as long as you do not receive anything of value (beyond good will or a small token of appreciation) in exchange. (Note: You cannot, for example, "donate" $xxx to a university and designate it for a scholarship for your child as you would be receiving something of value in return.)

As for setting up a matching challenge, you'd be eligible for the tax deduction once you give your check to the charity (i.e., after they notified you that they raised the match, for example.)
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Old 02-06-2008, 09:42 PM   #14
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I like it Al, and it does not seem selfish to me.

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Old 02-06-2008, 09:47 PM   #15
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How can giving money to others be selfish? Good karma to you T-Al.
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Old 02-06-2008, 10:05 PM   #16
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For me to do this
the motive to delay the charity seems self serving,
but still better than giving nothing.
It seems to be giving out abundance rather than sacrifice.
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Old 02-07-2008, 10:49 AM   #17
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since you can not give what you do not have, when is giving not of abundance?
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Old 02-07-2008, 11:45 AM   #18
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Quote:
Originally Posted by TromboneAl View Post
Let's say that instead of giving, say, $2,000 to charity each year, you put that $2,000 in particular mutual fund account, with instructions in your will that the contents of that account should go to a specified charity.
That used to be Buffett's approach-- he felt that he could compound money better than any charitable endowment, and he felt that he'd never have to worry about giving it away because he'd die before his wife and it'd be her problem.

Then Susan Buffett died and he had to re-do his estate planning. And somewhere along the process he noticed that Melinda Gates was doing a pretty good job with her foundation.

When we make our charitable donations we move the money to Fidelity's donor-advised charitable gift fund. We can't get it back but we can separate the tax deduction from the issue of when to give the money. That way we can donate appreciated shares (or sell at the top) when it makes sense, and we can make a grant at a specific time or for a specific project.

If you'd rather retain control of the money, though, then why put it into a separate fund? Another approach would be to keep it in your portfolio and just track it with a spreadsheet or a Quicken lot.
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Old 02-07-2008, 01:27 PM   #19
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If you need the $ then don't give it away

Consistant giving is as important (maybe more) to non-profits as one-time $ they need for that year. Many donors give one time gifts and then "rotate" who they donate to or move on to another issue etc. Consider your donation an "investment" and give consistantly and over time and the group and it's beneficiaries will prosper more!
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Old 02-07-2008, 01:52 PM   #20
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Quote:
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To play devil's advocate, it's selfish because it's saying "Here's some money for you, starving children, but only if I don't need it."
Were you a scholastic philosopher in the Middle Ages?
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