Thrive Through Philanthropy

Turn Your Financial Success Into A Philanthropic Legacy

A Brief History Of American Philanthropy

In 1889, Andrew Carnegie wrote The Gospel of Wealth, in which he asserted that all personal wealth beyond that required to supply the needs of one's family should be regarded as a trust fund to be administered for the benefit of the community. This is widely regarded as the "Bible" of American Philanthropy.

In short, philanthropy is a "philosophy" where you believe that doing well and doing well go hand-in-hand. Instead of a one-time donation to a charitable cause that you care about (charity), you and your family are integrating "giving" as a part of your overall operating model, making it more formalized, structured, and consistent.

If you're looking to transform your financial success into a charitable and philanthropic one, you're in the right place - we're here to help you integrate philanthropy help you discover the monetary and non-monetary benefits of transforming into a purpose-driven entrepreneur, investor, and professional.

Schedule A: Charitable Tax Deduction

Senator Henry F. Hollis of New Hampshire, perhaps one of the most influential figures behind the introduction of the "charitable tax deduction" concept, as found in today's IRC Section 501(c)(3), explained the rationale behind allowing these deductions as follows in 1917:

Usually people contribute to charities and educational objects out of their surplus. After they have done everything else they want to do . . . if they have something left over, they will contribute it to a college or to the Red Cross or for some scientific purpose. Now, when war comes and we impose these very heavy taxes on incomes, that will be the first place where the wealthy men will be tempted to economize, namely, in donations to charity. They will say, “Charity begins at home.” . . .

Look at it this way: For every dollar that a man contributes for these specific charities . . . the public gets 100 percent. . . . If it were undertaken to support such institutions through the Federal Government or local governments and the taxes were imposed for the amount . . . [i]nstead of getting the full amount they would get a third or a quarter or a fifth.

The Senate agreed with this logic and The War Revenue Bill (ratified October 3rd, 1917), included this "charitable tax deduction" section.

This incentive to encourage private funding of “religious, charitable, scientific, or educational purposes, or societies for the prevention of cruelty to children or animals", is still found in today's tax code, 100+ years later.

We are "obsessed" with helping businesses and individuals incorporate philanthropic initiatives, both at a corporate and personal level, and use their "time, talent, and treasure" to not thrive at a personal level, but help humanity thrive as well.

Make Philanthropy Your Operating Motto!

Here are some short and long-term benefits of incorporating philanthropy in your business, personal life, and investment strategy...

1: Strategic Asset Preservation

Establishing a foundation can help protect your wealth through strategic investments that are safe from volatile markets and from risky investments.

You will learn how to position the foundation as a wealth preservation vehicle that can be leveraged year after year, during your life, and well beyond that. The goal is to create a vehicle that preserves assets for many generations, with the mechanisms that prevent "spendthrift" heirs from depleting the wealth that you leave behind.

2: Family Members Control Foundation's Activities

The unique benefit to structuring a foundation is that family members can control investments and foundation's activities - they are on the board. In essence, you remove assets from your personal assets, but maintain control of how those assets can be invested and donated.

Many of our clients who have pursued the philanthropic path were looking to structure irrevocable trusts and convey assets to a corporate and independent trustee. While this strategy is viable in some scenarios, many individuals wanted to control how the funds were being directed and invested, which generally does not happen with irrevocable trusts, especially non-grantor ones.

The foundation offers the best of three worlds - control over the fund, removal from the estate, and a "foundation" that family members can continue to manage for many generations.

3: Growth In A Tax-Exempt Environment

By channeling funds into a foundation, the assets can benefit from growth in a tax-exempt setting, allowing your contributions to increase their impact over time without the burden of tax liabilities.

In essence, the greater your commitment to funding socially beneficial causes, the more tax incentives and breaks you can receive—it's an encouragement embedded within the Tax Code, and has been around since 1917.

4: Unique Investment Opportunities

Foundations often have access to unique investment channels that are not readily available through traditional investment vehicles. This exclusivity can lead to distinctive growth prospects and a diversified portfolio.

You'll learn by examining the strategic moves executed by the world's leading philanthropists, who are also very savvy business owners and investors, and they strategically use the foundation as a vehicle to penetrate into new markets, boost goodwill and credibility, and even gain the first-mover advantage by "funding" technologies and, discoveries, and inventions through their foundations.

5: Lower Income Taxes By Donating To A Foundation

Donating to a private foundation can significantly lower your income taxes by allowing you to claim deductions up to 30% of your adjusted gross income for cash donations. This can be claimed as part of your "itemized deductions" every single year.

Any excess amount can be carried forward for up to five subsequent tax years. This enables donors who exceed their deduction limits in a given year to still benefit from their generosity by applying the unused portion of their deduction in future years, up to the applicable limits each year.

The foundation is designed to last the course of your life and beyond, which means that you can leverage this deduction year, after year, for the rest of your life.

6: Lower Estate And Gift Taxes By Donating To A Foundation

Leverage philanthropy to manage your estate size, reduce estate and inheritance taxes, and circumvent gift taxes rules placed on individuals and trusts.

Estate Size Reduction: By donating to your private foundation, you can effectively reduce the size of your estate. Since these assets are no longer part of your estate, they are not subject to estate taxes upon your passing, which can lead to significant tax savings.

Minimizing Gift Taxes: When you transfer assets to your foundation during your lifetime, these gifts can also be eligible for gift tax charitable deductions. Charitable donations fall outside the annual and lifetime gift tax exclusion limits, which allows you to become a lot more strategic and tactical in the way you gift and donate.

7: Lower Capital Gain Taxes By Donating

Donating appreciated assets like stocks or real estate to a foundation can minimize capital gains taxes, making it an attractive financial strategy.

There are different limits and calculations that are used when you donate a publicly-traded stock, versus real estate or other assets. Generally, donations of assets are limited to 20% of your AGI, and you can claim your adjusted cost basis in the donated property, except for publicly-traded stock which receive the FMV of the stock at the time of the donation.

There are a plethora of nuanced strategies that can be used to lower capital gains, such as (a) donating the proceeds of a sale, (b) donating the capital gains tax portion of a sale, or (c) donating the asset before the sale and selling it through the foundation.

Which of these strategies is the right one for you to leverage depends on your short and long-term goals, especially when you factor in if and how other entities (LLCs, INCs, or trusts) could be leveraged. These are the nuances we will help you learn and understand in the Become A Philanthropist™ Program.

10: An Alternative Structure To Irrevocable Trusts

As mentioned earlier, many of our clients who have decided to pursue the path of strategic philanthropy have done so because they liked the idea of having control over how their wealth would grow and compound, and how it shall be used to benefit others.

In the case of irrevocable trusts, with an independent trustee, whether structured with bifurcated investment, distribution, and management boards, or some other complex structures like Defective grantor trusts, installment trusts, etc. - the donor (grantor) generally does not have control once they "gift" the asset into the trust.

The foundation offers an alternative where you CAN remain in control of the investments as a board member, and manage how the funds are invested. The assets are no longer yours - they belong to the foundation, but you and your family members are the controlling board members.

Remember "Gospel of Wealth" and the quote that any "excess beyond one's personal needs should be considered as a trust fund for the public's benefit" - that philosophy is engrained into the DNA of "foundations".

9: Donate Directly To Causes

Foundations give you the control to direct funds to specific causes or issues you are passionate about, ensuring that your charitable vision is realized and can be preserved, and even expanded by future generations.

Many individuals who have worked with us were in the market to structure a Donor Advised Fund (DAF). Although they receive a larger income tax deduction and the limits are higher (50% of AGI and 30% AGI for assets), you part complete control of the funds once they are donated.

This might be viable for many individuals, but for those who are looking to get involved at a deeper level, the benefits of structuring and mastering the foundation outweigh the DAF.

10: Protect Your Legacy, Protect Assets From Spendthrifts

Creating a foundation allows you to establish a lasting legacy that will continue to influence and contribute to the community for many generations. It's an opportunity to turn your financial legacy into one that is based on contribution to humanity.

It also helps you "preserve income and assets" from "spendthrift" beneficiaries, who have the potential to "blow through the funds" the moment they get their hands on it.

This happens more often that you can imagine, and it has also been a motivating factor for many of our clients who would rather tie-up an asset to a charitable cause than risk it in the hands of a spendthrift beneficiary.

11: Create New Jobs And Opportunities

Foundations stimulate economic activity by creating jobs and funding initiatives that can transform communities, fostering further opportunities. Think of the foundation as an investment engine that allows you and your family to invest in assets that can grow the size of your fund, which means you can contribute more to the causes you care about, and, in turn, hire more people to facilitate this process (bankers, financial advisors, realtors, brokers, lawyers, accountants, etc.).

12: Complimentary To Wills, Trusts, LLCs, and INCs

Integrating a foundation with your existing estate plans and business structures can enhance your financial strategy, providing flexible solutions for managing your wealth and philanthropic activities. The foundation need not be treated as a stand-alone entity that's independent from all other legal structures, but could be viewed as as enhancement to other entities.

We help you understand and integrate your foundation with the other entities that you currently have or may need in the future, such as LLCs, incorporations, wills, or trusts.

13: Employment For Family Members

A foundation can be a lasting institution that provides stable employment and leadership opportunities for future generations within your family and community. The foundation, as the name suggests, is the "foundation" that your heirs can rely on for employment, for learning, for entrepreneurship, to learn how to invest, how to act as a responsible trustee, and as a compassionate human who puts charity as their "operating and guiding motto".

14: Donated Assets Are Not Reachable

Once assets are donated to a foundation, assuming they are free from any potential or pending claims or litigation, they are no longer a part of the person's estate, and cannot be liquidated in a personal lawsuit.

The foundation, although managed by family members, is a separate legal entity that is NOT attached to any other individual, company, or organization.

The Thrive Through Philanthropy™ Program Provides The Technical And Strategic Guidance To Help You Master These Topics



We provide comprehensive support with all the components related to the setup of your foundation, such as: state and federal registration, tax-exemption status, drafting bylaws, board duties, internal and external agreements, as well as help with the setup of the banking, the initial funding, and completing a "donation".



Get comprehensive advice, strategy, and support from our team of accountants and advisors to stay organized, strategic, structured, as well as timely, in compliance, and within the rules and regulations of the game.



We guide you through the optimal way to stay in compliance on all fronts - legal, tax, operations, investments, donations, board duties, compensation structures, avoiding conflicts, etc.



Guidance on how to find the right advisors, programs, and funds that not only grow the fund, but how to also invest in assets that that directly further your mission and are for charitable use.



We help you evaluate various strategies that involve the donation of assets, cash, or sale proceeds to the foundation, and assist in growth and preservation of these assets inside the foundation as well.

Transform Your Financial Legacy Into A Philanthropic Legacy, While Preserving Assets, Reducing Taxes, And Empowering Your Family And Society, During Your Life & Beyond.

We invite you to schedule a call to discuss the details of the program

One the next page, we have included a few resources that can help you prepare for your call, conduct a little more research, and ensure you're able to cover all the questions that you have during your call

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Available Starting times for Mon, May 27, 2024