Most of us are interested in charitable giving and the causes we care most deeply about. As a society, we are generous. 2/3 of us give to charity, and most of us are giving at 2-4% of our income.
But if you’re like me, you want to do more. This week’s video was inspired by a quote in a book that I recently read – Invest Yourself, by John Abbate. In the book, Abbate says: “There is nothing wrong with the idea of leaving some of our wealth for others when we pass, but there is no risk whatsoever in this philosophy. It is a mentality that says ‘I am going to live my life as I wish, providing for all my material desires, but if there is anything left after my passing, I would be willing to give a bit of it away to those in need’. That is acting in the comfort zone of contribution.”
What if it were possible to give boldly and 10X your charitable giving?! In this video, we share how that’s possible with 2 key ingredients:
- Be intentional with your charitable giving
- Grow the dollars earmarked for charity
We also have some insights on how you can use this giving strategy in tandem with a large taxable event, like the sale of a business, to help minimize taxes. Click here to watch the video, or read the full video transcript below.
Full Video Transcript:
So today that’s what I’m here to share with you. A bigger, bolder way to give. A way to 10x your giving over your lifetime. So instead of giving $100,000 over your lifetime, which is pretty awesome anyways, imagine if you could turn that $100,000 into a million dollars of giving? Imagine how much impact you could have on the causes and charities, the churches, the people you care about if you could 10x your charitable giving. That’s what we’re talking about today.
My name is Ashley Micciche. I’m the CEO of True North Retirement Advisors, where we specialize in helping business owners reach their personal and business financial goals. We help you avoid costly missteps and do way more than manage your investment portfolio.
One of those things that we do and we love working with clients with is strategizing with them on their charitable giving. We love working with clients that are charitable and we want to help them give as much as possible, and be as generous as possible to the causes that they care most deeply about.
My Story: A Bad Giving Strategy
Growing up, we went to church. And the extent of my charity was putting some money in the collection basket at church every week. Five bucks or something.
Into adulthood, I’ve never been intentional about my giving and how I give, although I’ve always wanted to do that because I always feel like, “Gosh, I’m not giving enough. I’m not doing enough.” And so I’ve really struggled with this over the last few years. Wanting to give more but also being pulled in different directions.
So it was really random. I might go to a charity golf tournament or you go to one of those charity auctions and they do the paddle raise. That’s my favorite part, the paddle raise, because you get the very generous, showy people who initially are like, “Alright, who’s gonna give $10,000?” And they’re like, “Yeah.”
Meanwhile, I’m over here and I’m waiting for, “How low are they gonna go?” You get to 100. Okay. Can I …. No, no, they’re gonna go to 50. And then they’re at 50 and it’s like … They’re gonna go to 25. Okay. 10? And I’m nudging my husband like, “Should I? Should I?” It’s $25.
Seeing how low they go with the paddle is not a good giving strategy.
Do you have a scarcity mindset with your giving?
The problem with my own giving, and I think what I see among a lot of other people that I talk to, because interestingly enough we don’t really talk about this a lot. It’s very taboo to talk about how generous you are or how much you’re giving. Nobody really knows how much other people are giving.
But, I am in a very unique position where I see line items in people’s budgets. So I can see exactly what they’re giving, and we have conversations like this all the time…What are you currently doing? What do you care deeply about? What are the causes that you care about? How much are you contributing right now? What do you want that to look like in the future?
These are all things that are regular conversations with clients. So it comes up all the time where I get to really see what people are giving. And what I see by and large with people who aren’t giving a lot, a lot of times it’s because there’s this scarcity mindset. “If I give generously, if I just don’t … I’m gonna give out of my excess. I’m not going to give boldly or have any planned giving in place. I just give randomly here or there.” It’s not really a good strategy.
And I think most of us, we are very generous people. We want to do more. But, we don’t. And I think a big reason why is because: A, we don’t plan for it. It’s not a line item in our budget. And the other reason why, there’s a scarcity mindset.
So we think, “If I give, I’m not gonna have enough because as soon as that money leaves, it’s gone.” And so there’s that as well. But the clients that I see that are very generous, they don’t have that scarcity mindset and they’re able to give freely and they enjoy it and it brings them fulfillment.
Intention = More Charitable Giving
Over the last five years or so, my husband and I have become a lot more intentional with our giving. So instead of a random GoFundMe or a paddle raise at an auction or an entry into a golf tournament where it doesn’t really like giving because I’m having a good time anyways …
But instead of giving randomly, we give monthly and we choose. Here are the causes that we’re gonna support and here’s the amount that we’ve budgeted for that and here’s what we’re gonna give every single month to these causes.
And actually, what it does, other than just allowing us to give more because we’re more intentional about it … But what it also allows you to do that’s so powerful is it allows you to say no to a lot of the random stuff that you don’t really … Yeah, you care maybe in the moment, but you’re really not passionate about it.
So if I’m not into saving the gophers and someone comes to my door and I hear this heart-wrenching story about gophers and I really want to contribute, and yes, I will fund your GoFundMe but no, no, I can’t. My charitable giving is spoken for this month.
The key is you have to be intentional about your giving.
The Secret To 10X Your Charitable Giving = Growth
So when you give to charity, you actually have two options. One is, you just give directly to charity. Every month, every year, random times. You just write checks to charity or raise that paddle at the auction that you’re going to.
But the other way to invest and to give charitably is with a more longer-term planning focus, is a donor-advised fund.
Donor Advised Fund – The Basics
So if you haven’t heard of a donor-advised fund, what it is is it’s a way for you to set up an account, just like you would a regular investment account, and you make your charitable contributions directly to that account. It allows you, instead of giving directly to charity, you give into this bucket.
And you can give monthly, you can give when you have these big windfalls. And then, you decide how and when and who gets those contributions.
10X Case Study #1 – Large Lump Sum Contribution
So I’m just gonna use a simple example with nice round numbers that we can all grab onto. So business owner takes $100,000 from the sale of the business and puts that into a donor-advised fund. And this business owner never contributes to this account ever again.
And so I’m gonna assume, nice round numbers, it grows at 10% a year. It grows 10% year in, year out, every year.
If this happens … And let’s say he makes no distributions to charity over this time. So you do have control. The way the tax laws are currently written, you do have control over the timing of the distributions from the account to various charities.
You retain a lot of control over how and when that money gets dispersed, which is extremely attractive as well.
Okay. So if the assets in that account … Remember his original $100,000 investment?
- If they grow at 10% a year, after 10 years he’s going to have $259,000 in that account.
- After 20 years, he’s going to have $672,000 in that account.
- And, at 25 years…Now at 85 years old, he has over a million dollars in this donor-advised fund!
He has 10x’d the amount that he will be able to disperse to charities over that 25-year time period. Absolutely incredible.
Think of the impact you can have when you give a million dollars instead of $100,000 to charity?! It’s absolutely amazing.
When you sell the business, you may want to give a substantial amount of money charity or your church or some cause that you care about. But you may not necessarily know who or what, and so the donor-advised fund is really powerful in that it allows you to figure that out later.
Not only did he 10x his giving, but he did it in a very tax-efficient way because in that all-important year when he sold his business and probably paid a lot of taxes to Uncle Sam, $100,000 of that that went into that donor-advised fund was excluded from his taxable income for the year.
10X Case Study #2 – Annual Contributions
Let’s say you’re 50 years old right now and you plan to retire at age 65. So you’re gonna give $10,000 every year for the next 15 years. That’s $150,000 that you’re going to give to charity.
You have two options. One is, you could make that contribution directly to a charity or a number of charities. Or two, you could make that contribution to a donor-advised fund and allow that to grow for you and work for you.
But here’s how you can also 10x your planned annual giving. So from age 50 to 65, you contribute $10,000 a year. So over that 15-year timeframe, you’ve contributed $150,000.
And like a lot of people who are retired, things change when you retire, right? You are all of a sud
den living on a very fixed amount of assets, fixed amount of income a lot of times. And so there isn’t as much wiggle room.
So I’m going to assume in this example that you actually stop contributing to your donor-advised fund at age 65 when you retire. So assuming a 10% growth rate over that time, what you ended up with at the end of those 15 years.
Your original contributions of $150,000, but if it grows at 10%, you actually ended up with $391,000 in that donor-advised fund that you can then disperse to charity over your retirement years.
That just tickles me thinking about that. $391,000 from $150,000 in contributions.
But here’s where it gets even juicier. Now when you’ve retired, you’re gonna start those payouts to charities. If you’re gonna use average returns, you can plug in the numbers and say, “Okay, it this grows 10% a year, what can I distribute every year to charity so that I run out by my 90th birthday?” Or whatever you want to do.
If you do the math, if you add that up … you made $150,000 in contributions, but your distributions to charity from the account, if it grew at an average of 10% a year, was $972,000.
Imagine Your Impact with 10x Giving!
That’s what leaving a legacy is all about! Being so intentional about your giving. And imagine not just the impact that you could have, but you actually get to see the results of what you’re doing.
Not just leaving it to your estate and hoping that they use it how you want. You actually see the impact. You see the building being built. You see the people being fed. You get to experience all those things that your contributions are helping to make possible.
And because you get to do it in a much bigger way than you otherwise would have, regardless of your assets, regardless of your income, when you use donor-advised fund and it grows for you over time, you’re able to multiply your giving and give so much more than you otherwise would have been able to.
My challenge to you…
So my challenge to you today is to get out of your scarcity mindset, okay? I know this is really hard to do. It’s really hard for me to do and it’s something that I still struggle with all the time…making sure that there is enough and not being confident that if I give more boldly that there will be enough.
But with a little planning and getting out of that scarcity mindset, you can have a tremendous impact over your lifetime of the causes and the people and what you care about most in this world.
So if you’re like me and you’ve been wanting to do more, to be more, to grow more, to live a more fulfilled life and see the world around you improve as a result, please take a step. Get out of your comfort zone. Set up a donor-advised fund. You know what? It only takes $5,000 to set up a fund.
Living a Legacy to Leave a Legacy – John Rockefeller
I want to leave you with a story about John Rockefeller. So when I was doing some research for this video, I was looking up some of the larger foundations and just looking at some of the names, a lot of which you might recognize. And one of those names is John Rockefeller.
John Rockefeller died 81 years ago in 1937. So he’s been dead for a lifetime! His foundation, the Rockefeller Foundation … In 2013 alone, his foundation gave $137 million, just in that one year, to various causes.
$137 million in one year alone!
So a lifetime after his death, his legacy lives on. And to date, it is estimated that the Rockefeller Foundation has given $17 billion to improve the lives of people all around the world.
Now that is a legacy.
So whether you have $5,000 or $50 million, consider a donor-advised fund for your planned giving so you can 10x your lifetime giving.
Thanks for watching. If you’re watching on YouTube, please subscribe to our channel. If you have questions about your specific situation, let’s hop on a call. 15 minutes. I can answer some questions for you about donor-advised funds, what might be appropriate for you if you have specific assets where you’re not sure if they qualify for a contribution to a donor-advised fund, I can help.