Wealth - The Feel-Good Effect

Charitable giving benefits people in need — and donors, too


In the Coachella Valley — where almost 1,000 nonprofit organizations raise money to heal, education, serve, and inspire — charitable giving is a way of life. Many of the area’s most celebrated events, and many more lesser-known ones, benefit people in need throughout the desert communities.

Intelligent giving benefits charities as well as donors.

“Charitable donations come in many forms and may be structured different ways,” says Joseph Davison of Palm Desert-based LPL Financial. “But the common thread is the ability to reduce your taxes while helping to improve the lives of people, animals, and the environment in which we live.”

Jim Casey, CEO of Integrated Wealth Management and a philanthropist himself, says the feel-good factor is important, too. “I have a client with a charitable remainder trust, where she receives income and tax benefits,” he says. “She told me she loves the foundation she gives to, and she feels like the recipient.”

A CRT is an arrangement where the donor gives property or money to a nonprofit while continuing to use the property and/or receive income from it while alive. Donors must structure CRTs with input from experienced wealth advisers and attorneys. “When you work with an intermediary who knows the right questions to ask, and the CRT is structured properly, then it will not come back to bite you,” Casey says.

A survey by Charity Navigator, a national resource for nonprofit evaluators, found that 62 percent of donors polled during last holiday season gave to human service charities such as food banks and homeless shelters. The feel-good factor of giving is evident here.

To donors evaluating charities, Ellie Hollander, president and CEO of Meals on Wheels Association of America, offers this advice: “Ask yourself what you consider a successful nonprofit. Would you want to invest in a group with a fresh approach or proven experience, or a mix of both? Pick up the phone and ask questions directly to the organizations that surface to the top.”

Web-based crowdfunding has become a viable giving option. Razoo, founded in 2007, has generated more than $160 million in contributions for thousands of causes. On this platform, donors browse dozens of categories of nonprofits and charities, then contribute online through Razoo. “To get the most from giving, people need to determine where they are in their lifecycle in terms of interests and timing,” says Razoo CEO Lesley Mansford. “Who you want to give to in your thirties is different from how you feel in your sixties.”

Determining the most effective vehicle for high-net-worth giving can be daunting. Michele Mulrooney, an attorney and partner at Venable LLP in Los Angeles, does estate planning for entertainment industry clients, and offers insight: “We look at giving during your lifetime because of the income tax deduction, and then those assets are eliminated from your estate,” Mulrooney says. Because many celebrities — like well-known corporate executives — want to avoid seeing their tax reports on the pages of People, Mulrooney directs them to community foundations where, unlike a family or personal foundation, tax information on donors remains private.

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