Giving with Impact:

MICHAEL GORDON VOSS:  Welcome to Season 3 of Giving With Impact, an original podcast series from Stanford Social Innovation Review, developed with the support of Schwab Charitable. I'm your host, Michael Gordon Voss, publisher of SSIR. In this series, we strive to create a collaborative space for leading voices from across the philanthropic ecosystem to engage in both practical and aspirational conversations around relevant topics at the heart of achieving more effective philanthropy. 

Research tells us that there are certain resources most donors consult when starting to assemble a strategy for their philanthropy. These include peers, family, and well-known, publicly available sources of information on non-profits, like GuideStar or Candid. But among those top sources are also their existing financial advisors, people they already trust and are comfortable talking with about their finances. While many advisors may initially engage in financially-focused charitable conversations such as how much to give and the tax implications of various types of gifts, these discussions often become much deeper. They can include donors' motivations and goals for giving, or the best ways to identify a cause or organization, and even how to involve their family in a charitable plan.

So how do you start these deeper conversations, whether you're a donor or an advisor? And what does this sort of strategy entail? 

And perhaps, most importantly, how does all this planning help the organizations and causes that donors are looking to support? 

To share some of their experiences leading conversations about this process, and helping people think about their charitable giving strategy and related implications, we're joined today by two individuals with a great deal of knowledge and perspective working with donors.

Returning to the podcast is Stasia Washington, Managing Director at First Foundation Advisors, a private wealth management group. Stasia works with families to create customized plans to protect and grow wealth, often across multiple generations. She also helps non-profits, private family foundations, and endowments to realize their objectives through strategy and asset management. Recognized throughout her career, Stasia's honors include the National STEM Top Woman of Color in Finance Award, the American Cancer Society Award of Merit, and the Los Angeles NAACP Outstanding Leader of the Year Award. 

Stasia currently serves her community as a member of the board of directors of The Driving Force Group, a philanthropic advisory firm, and Women in Film. Stasia also serves as audit chair for The MusiCares Foundation for the National Academy of Recording Arts and Sciences. 

Stasia received her MBA from the George Graziadio School of Business and Management at Pepperdine University.

Also, joining us is Shawn Jensen, a senior manager in the Relationship Management team at Schwab Charitable. Shawn brings years of experience in both the banking and non-profit sector. Prior to joining Schwab Charitable, Shawn played an integral role at the non-profit, Altasea at the Port of Los Angeles, contributing to a large capital campaign for a marine research program and developing strategic partnerships. Shawn also secured funding for education programs and worked with other non-profit organizations to reach thousands of middle school students in Los Angeles County. Shawn received his BS in International Business from San Diego State University, with emphasis in finance and Spanish.

Stasia, Shawn, thank you both for joining me today as we explore ways that donors can integrate charitable planning and giving into their overall financial strategy. Let's get started.

Stasia, let me start with you. In your experience over the years, how do you start the process with donors of thinking about and creating a strategic plan for charitable giving?

STASIA WASHINGTON: Michael, thank you for the opportunity to participate, and I especially want to give a thank you to Schwab Charitable for the invitation, as well as Stanford Social Innovation Review. 

The conversation about charitable giving in our client engagements begins in the initial time that we are getting to know each other. We believe that an understanding around charitable inclinations is essential for us to be able to look at both sides of a family's balance sheet. Of course, there's the overall aspect of our role as financial advisors, but understanding philanthropy and how it intersects with a family's goals and objectives, as well as understanding how… their journey to success, and you'll find that there's a lot of commonalities there. We ask those questions at the beginning of our relationship, given the fact that philanthropic consulting is an essential aspect of the work we do as a firm. We're one of the few institutions that has a full-service philanthropic consulting practice within our wealth management offering, so we ask those questions up front.

MICHAEL:  And building upon that, Shawn, let me ask you. You know, Stasia talked about the importance of having these conversations early. When donors are looking at integrating their charitable giving into their overall financial strategy, what are some considerations that they should keep in mind if they are trying to maximize the impact of those charitable dollars?

SHAWN JENSEN:  Thanks for that question, Michael. You know, Stasia laid out a lot of the key components, which is having these conversations with the financial advisor and having families really lay out to their financial advisor what their goals and objectives are when it comes to philanthropy. One key component of that is who is going to be involved from the family in this philanthropic journey. Equally important is the assets they are going to be using to fund their philanthropy, what timing they may want to consider from a tax perspective, so they get the biggest tax benefit, but are also able to give to charities in the time that is going to be most meaningful to them and to the charities they're supporting. There's various giving vehicles that exist that clients can take advantage of, and financial advisors can help them select the proper giving vehicle to, ultimately, help them get to their financial and philanthropic goals at the same time. 

One thing I like to point out is there are vehicles out there, like the donor-advised fund account through Schwab Charitable, that have a zero minimum opening balance requirement. So these vehicles and planning strategies are really available to families with all different size philanthropic goals.

MICHAEL:  Well, thanks, Shawn. Stasia, let me come back to you. You and I had spoken about this, I think, before, but one of the moments when donors often start thinking about charitable giving is if they experience a sudden wealth event or some other taxable event. Can you talk a little bit about that intersection of financial planning and charitable giving?

STASIA:  Yes. We hope to have the conversation earlier, I mean, prior to the actual event, and so that we can put mechanisms in place to plan for it. But if we find out that the transaction is taking place or it's being contemplated, again, the earlier we can have these conversations, the better we're able to offer a number of options. And it's an alphabet soup out there of different tools and techniques, especially in the trust world between charitable remainder trusts, and, of course, Shawn talked about donor-advised funds and family foundations. But the key thing is understanding that you can do well and do good. You can be able to mitigate the taxable event, and… first of all, by being able to donate highly appreciated assets. So if there's a large concentration of Tesla stock with a low-cost basis, for example, it's much better to be able to transition those holdings over to a charity of their choice that's set up to receive that, and allow them to pull the trigger on selling that asset and diversifying the ultimate proceeds from that. 

A part of the planning process and having a complete window as to all of their different private equity ventures, everything that's going on with concentrations, getting clarity and as much transparency as possible, so that planning is along the way versus being reactive. We have so many proactive tools out there to ensure that the family does not take on an unnecessary tax burden and the non-profit is able to benefit from these appreciated gifts.

MICHAEL:  So that benefit to the non-profit is a great point, especially in regards to appreciated assets or giving of non-cash assets. And there are ways to be more thoughtful about that that actually do provide more dollars to the non-profit. When we were talking before the episode, you had shared an example of that in some ways of that that was really important to both the donor and the non-profit. Could you share that example now on air?

STASIA:  Absolutely. We at one time had a client who had passed away. He was single. And he was over the exemption amount from an estate tax perspective. And so his father was trying to navigate three children who wanted various assets within his art portfolio. He had multiple items between sculptures and paintings that were very valuable, but these particular assets were tipping the estate tax exemption over to where the family was going to have to pay estate taxes. 

We came up with a strategy in which the father basically said, 'My son was very charitable in his heart, and if we could donate these assets to a non-profit and get them out of the estate, and the kids would have more to be able to through their distribution to divide in actual cash versus the illiquid asset we would be able to create a win-win.' And, sure enough, we were able to do that.

We identified a non-profit that we were able to donate the entire collection to. We worked with that non-profit to co-host an event in which the items were auctioned off to high-net worth individuals who were thrilled to get these particular collectibles in their own personal estates. And then the non-profit ended up with the actual cash. So all across the board, everyone was a beneficiary. 

It's just being creative and thoughtful and listening and thinking about different ways to deal with the real issue. And that's where the relationship that you have with the client and understanding their charitable inclinations early on allows for this type of proactive strategy. We try to get that card to do more planning on the charitable side early on in the life of our relationship, but, unfortunately, he was ailing and this is just something we couldn't get to at the time. We're just glad things worked out the way they did.

MICHAEL:  Very much. And I also want to just ask you one other thing you had shared with me is the benefit if you are on a board to this sort of approach.

STASIA:  Absolutely. Those of us that sit on boards typically have give or get minimums as a part of our board service. And give or get allows you to be able to facilitate gifts to the non-profit that can be illiquid or liquid. And so on the illiquid side of that, we encourage board members to become acquainted with planned giving as a solution, and when they're out, talking about the benefits of this non-profit to bring up the fact, you may have highly appreciated stock, you may even have real estate, or you have art. Talk about the ability to donate those assets over, and the non-profit is able to benefit. And then you mitigate a taxable dynamic that is at the forefront for so many people, given the uncertainty to changes that are going to be happening sometime soon to taxes, , under the new administration.This is a way to satisfy that give or get requirement.

MICHAEL:  So I think we'll come back and touch on some of those possible changes in a moment. But, first, Shawn, I want to come back to you. Stasia shared that example of the family that was dealing with the estate of a son who had passed. And I think back to your first answer, and you talked about who is going to be involved in the philanthropic journey, especially when you go beyond, let's say, an initial donor or donors. So are there any specific strategies or vehicles that can help with that process when you are including other family in your charitable strategy?

SHAWN:  Absolutely. So, again, starting from the beginning and having that in mind of who is going to be involved and potentially when they're going to be involved, I think that it's always best to involve family early if there's an objective for them to take part in the charitable giving that the family carries out. There are times when children receive assets from their parents in the form of a charitable vehicle, whether that's being successors on a private foundation or successors on a donor-advised fund account. And if they haven't had practice, that might not be a great experience for them. So we always recommend getting family involved early if they're going to be a part of that philanthropic plan. 

There are numerous vehicles out there, as Stasia mentioned, a full alphabet soup, but many of them lend themselves well to generational giving. One family could set up a charitable remainder trust where the charitable beneficiary has a donor-advised fund account and the children are the successors on that donor-advised fund account. Private foundations are set up where successors can take over the private foundation. But, again, these plans and processes need to be communicated and well thought out. And having family meetings, as well as meetings with financial advisors that the children are a part of are critical in making sure that these plans are carried out successfully. And also that there's going to be a level of satisfaction, both from the parents that are setting these vehicles up and these giving plans up and also with the children. You know, family legacy can be done many different ways, and part of that can be after lifetime when assets are passed down, but also during lifetime when parents are setting an example for their children and teaching their children, so that the history of family giving will continue into the next generation.

MICHAEL:  And is that… you know, when you're referencing that charitable legacy, can you talk to that a little bit more?

SHAWN:  Sure. So we have different ways that families can set up a charitable legacy, and, essentially, what families are often trying to accomplish is having the family name live on beyond their lifetime. And that could either be carried out by their children or through a giving vehicle that they set up that would distribute assets to charitable organizations that they wish to support beyond their lifetime. 

So the donor-advised fund account is one great option that families can take advantage of to satisfy this objective. When they set up the donor-advised fund account they can set up what we call the legacy program, where they can choose different charitable beneficiaries to receive assets in the form of a grant from their donor-advised fund account. But instead of being done in a lump sum distribution the assets remain invested in their donor-advised fund account and then get distributed to the charities of their choice over an extended period of time, which could go on into many years and allow that charity to not only receive more money in the long-term, but also a more steady income flow from this charitable giver. So in this instance, it gives families the ability to have their name last longer, live longer with that charity and support the charity for a longer period of time.

And, Shawn, similar to the example that Stasia shared earlier, I know you had an example of issues that could come up with intergenerational philanthropic strategies and a family foundation. Can you share that example with us?

SHAWN:  Yes. Thank you, Michael. So we do have families that put strategies in place and do communicate with the children about those strategies, and they might have best intentions going forward. However, as time goes on, lives evolve, they might find that these strategies are not the best fit for the family going forward. 

A family I recently worked with, the parents had passed away, and three siblings took over a private foundation. As time went on, the children's giving objectives, had grown apart from one another. The causes they wanted to support were a little bit different, and they also had some uneasiness that the causes they were supporting were not 100% aligned with the parents, as well. So the children came together and decided that, based on current living situations, they were currently living in different parts of the country and running the foundation was becoming less and less easy for them, they thought it would be better if they were able to work independently and still be able to give money to charity.

So a great solution that they came up with was to open three donor-advised fund accounts and divide the assets between the three of them. And going forward, they were able to each give to the charities that they wished to support at the timing that was most meaningful to them, and they were able to do so quite easily without a lot of administrative burden. 

So for them, even though the parents put together a good plan, they actually had prepared the children to take over the foundation, time just changed, and some of their objectives and living situations changed, but they were able to adapt and change their strategy and use tools to help them still carry out their philanthropic objectives individually, but also still carry on the family's objective of carrying out the philanthropy.

MICHAEL:  And I think that's another great example of the sort of win-win approaches that you both you and Stasia have been talking about on this conversation. 

Stasia, I'm going to come back to you. As Shawn was discussing generational giving, I was thinking about how that relates to estate planning, and I said, I would come back to the question of changes in policy. What are some estate planning considerations? And are there any changes that may be particularly important at this time related to evolving government policies?

STASIA:  Well, given some of the proposals that are floating out there, gifting in 2021 might be very important, however, we still don't have clarity. What we are hearing is that there could be a lowering of the estate tax exemption from 11.9 million per person to potentially 3.5 million and lowering the gift tax exemption to a million. But, you know, for those with a net worth of more than 3.5 million it really may be important step up giving this year. Again, there's still a lot of uncertainty out there and we have heard that it could potentially be retroactive to April 1st of this year.

It's really important to start having conversations with your estate planning attorney, as well as your CPA, and think about non-profits that you really want to engage and start gifting to now. Again, the donor-advised fund is a great solution to be able to do that, given the level of uncertainty that's out there. 

MICHAEL:  Right. And, Shawn, you know, Stasia just mentioned thinking about the non-profit, a lot of this conversation we've had so far focuses on the benefits of this sort of strategic charitable planning for the donor. But what about the benefits for those organizations they're supporting? Other than getting more charitable dollars through certain approaches, what other benefits does this type of planning provide for the organizations that are doing the work that donors care about?

SHAWN:  Absolutely. And Stasia brought up a good point earlier with the artwork example and other highly appreciated assets that some donors are holding. Those do make great gifts because they're tax advantaged, in the sense that clients can get a great capital gains tax mitigation strategy in place by using those to fund their philanthropy. But they're not always the easiest assets for a non-profit organization to accept. So organizations like Schwab Charitable and other giving vehicles are able to accept those assets and allow the client to then, in turn, recommend grants to their non-profits of choice, and the non-profit's going to receive a check instead of artwork, real estate, or perhaps some complicated stocks that the client is holding. 

If a client or family has multiple organizations that they would like to support, they can spread that asset to various organizations if they're able to liquidate it through a giving vehicle like a donor-advised fund account.

MICHAEL:  And I also think earlier you mentioned the idea of being able to spread out funds, go into a non-profit over a longer period of time, especially when you're thinking about a charitable legacy. I think that was another example that's sort of consistent cash flow, which is beneficial to non-profits. Anything else on that point or that idea?

SHAWN:  Correct. oftentimes, we meet with clients and families that have charitable interests and they want to make a bequest to a charitable organization as part of their estate plan. And they may name a single organization in their trust to receive a gift and it may even have a restriction associated with that gift, and there has not been a relationship formed with that non-profit organization. And sometimes these types of gifts can ultimately be difficult for a non-profit organization to handle. With thoughtful planning and some strategy that's put in place donors can use giving vehicles to stretch out the flow of dollars to those non-profit organizations and instead of having a one-time gift, they could last years. And also through that type of thought process, donors might be more encouraged to develop a relationship with a non-profit that they're going to be supporting. And then, as a result, they might find different ways that they could support that non-profit organization, maybe have a restriction for a more mutually beneficial cause. So that's just one way that people can go about thinking about their charitable giving.

MICHAEL:  I think that the idea of fostering that relationship with the non-profit is a really important one, and thank you for mentioning that. 

Stasia, in preparation for our conversation today, I was reflecting back on the last time that you were on the podcast, when we discussed, among other things, the famous philanthropist and businesswoman, Madam C.J. Walker, and her lifelong approach to giving, which was truly inspiring. Any lessons or advice for today's donors that we can take from her example?

STASIA:  Well, one thing I admired about Madam C.J. Walker is that she began giving early in her career journey. It wasn't when she became extremely successful. She gave along the way. And embracing philanthropy as a way of life, just lends to a richness of who we are as a community, as a whole. And, you know, I love the three tenets that she espoused. Number one, give as you can to be helpful to others. Number two, spare no useful means that may be helpful to others. And number three, give more as your means increase to help others. And it really goes back to time, talent and treasure, and being able to embody a spirit of that as a part of a way of life. It's just rich and fulfilling. And so I encourage my clients to consider giving along the way and at every aspect, not just when an event occurs, not just from a taxable perspective, but our society today needs the entire community to lift us up from where we are.

MICHAEL:  I like that framing of embracing philanthropy as a way of life. 

Shawn, any closing thoughts or advice for donors from you?

SHAWN:  Michael, I think the most important thing is for clients to engage with their financial advisor on this topic. If philanthropy and charitable giving is important to you, then let your financial advisor know. And philanthropy is personal, so for the clients or donors, it's important for them to stay true to their objectives of what they're trying to accomplish, what charities they want to support, what causes they want to support, again, who in the family is going to be involved, and perhaps the timing of those gifts. 

And financial advisers should be the ones that can really focus on how they can make more impact with their dollars, how their charitable dollars can go further, how they can get the best tax benefit for the gifts that they're making, and how to make it convenient and seamlessly fit into their overall financial plan. But having that discussion is critical and it's important to do so as early as possible, just so that, again, as liquidation events occur, as family dynamics change, financial advisors have that holistic view of what the client is ultimately trying to achieve with their philanthropy and how to make it as successful as possible.

MICHAEL:  Well, I think that's as good a place as any for us to end. Stasia, Shawn, thank you, both, for your time today. Like any strategy, financial or otherwise, charitable giving is something that I think we all recognize requires thought and discussion. And while we've only begun touching upon some aspects today, you've hopefully provided everyone listening with a good starting point for this work.

STASIA:  Thank you, Michael.

SHAWN:  Thank you so much.

MICHAEL:  Thank you for listening. We hope you've enjoyed this episode. Please consider leaving us a review on Apple podcasts or your favorite listening app, as it helps others discover the show. We encourage you to listen to other episodes in this series, as well as other podcasts from SSIR. This podcast series is made possible with the support of Schwab Charitable, who played an important role in the selection of topics and speakers. For important disclosures and a transcript of this episode, visit schwabcharitable.org/impactpodcast.