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Winston Churchill is widely quoted as saying “We make a living by what we get, but we make a life by what we give.” Leaving a legacy through philanthropy is a noble objective of many leaders, families and corporations. Philanthropy may be used for teaching the next generation about family values, for tax deductions, or to support a cause or organization that has special meaning to the donor. In any case, there comes a time to consider formalizing philanthropy through a major gift to a public charity, establishing a private foundation, opening a donor advised fund or selecting another charitable planned giving vehicle. Typically a donor will need to consider several questions before deciding what option is best.
What tax deduction limits against AGI are needed?
How much time do you have to commit to the administrative responsibilities?
Do you wish to hire staff members to pursue a charitable mission?
Do you anticipate making grants to individuals, such as in a scholarship fund?
Do you want to maintain control over investment management?
How important is anonymity in your grantmaking?
What is the long-term legacy you wish to leave? How will you involve the next generation?
This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.
Bill Longan, Senior Investment Advisor, SunTrust Foundations & Endowments Specialty Practice and Elizabeth Horsley, Attorney with Williams Mullen discuss in greater detail specific sections of Uniform Prudent Management of Institutional Funds Act (UPMIFA), and the important guidance it offers to investment stewards.
The decision to use active management, passive management or a blend of both is important. It is an evolving discussion that can be adjusted as organizational needs, the economy and financial markets change. But, it is important to remember that it is only one step in the investment process.
There’s no right or wrong approach when it comes to deciding on a discretionary or non-discretionary investment model for your organization. Instead, a multitude of factors need to be carefully weighed to determine which model is right for your organization.