THE ORDINARY PHILANTHOPIST

"Philanthropist" is a word most often associated with names like Rockefeller, Carnegie, or Gates, but it is really a shame that we do not recognize the many "ordinary" philanthropists in our community and nation. Too often philanthropy is associated with enormous wealth and equally enormous charitable gifts when, in truth, there are millions of people who give more modest gifts that enable charities to profoundly enrich lives every year. As a planned giving consultant to the nonprofit community, I have the privilege and joy of working every day with "ordinary" philanthropists, and I can vouch for one certainty; a philanthropic heart is not measured by the size of the gift. These quiet philanthropists usually cannot give large amounts to their favorite charities while they are living because they need all their income for support, but they leave significant charitable gifts when they die by including the charity as a beneficiary of part of their estate assets. This type of giving is referred to as "planned giving."

The Power of a Charitable Bequest
One of the most common types of "planned gifts" is the charitable bequest. A person includes a charity, or charities, in her will or personal trust and leaves a specific amount of money or a specific asset to charity. She may also name the charity to receive her residual estate, which is what's left after all specific bequests to heirs are distributed. If the estate of the donor is taxable (in 2004 that includes estates over $1.5 million), the estate will be able to take a deduction for the charitable gifts made, which can reduce the inheritance tax bill. How significant are these charitable bequests in the United States? In 2001, bequests accounted for almost $16 billion of charitable gifts; in 2002 that number increased to over $19 billion; and in 2003, charitable bequests totaled $21.6 billion. But even given those seemingly large numbers, studies show that although 70% of Americans make charitable donations during their lifetimes, only about 8% make charitable bequests, foregoing the opportunity to continue helping their favorite charities and possibly foregoing some significant tax benefits.

Leave a Legacy™
In an effort to encourage more "ordinary" philanthropists to consider including a favorite charity in their wills, many communities have begun Leave a Legacy™ programs. Leave a Legacy™ programs are designed to help educate donors about the importance of continuing their charitable support with a bequest to a charity of their choice. In San Antonio, Leave a Legacy™ is sponsored by the local Planned Giving Council of San Antonio (PGCSA), a chapter of the National Committee on Planned Giving. For more information about the PGCSA or the local Leave a Legacy™ effort, please go to the PGCSA website at www.pgcsa.org. People who are charitably inclined and who have given throughout their lives to charities, sometimes do not realize that they can include those charities in their estate plans. While a charitable bequest is the most common way to provide a planned gift through an estate plan, there a many other ways to do so.

Planned Giving Stories
Charities may easily be named as one of the beneficiaries of an IRA or qualified retirement plan. The process is quite simple and only requires a change to the account owner's beneficiary designation form. The form is requested from the bank or plan administrator, the charity and other beneficiaries listed as desired, and the form filed with the bank or plan administrator. Retirement accounts are one estate asset that will be highly taxed when transferred to anyone but the spouse or a charity and are, therefore, excellent assets to give to charity. There are many other ways for a person to leave a charitable estate gift. For example:

• Julie has a paid-up life insurance policy that she bought many years ago. Her two children are doing well and Julie has already made arrangements for her final expenses so as not to burden the children. Julie has supported a local children's shelter with annual donations for many years. She decides to name the shelter as the beneficiary of her $50,000 life insurance policy to establish an endowment to support a special program for art therapy for the children.
• George considers himself to be very fortunate. He has done well financially, but he has no close family. George decides to leave moderate bequests to several distant cousins and the rest of his estate, which consists primarily of a large 401K account, to a charitable organization that provides cancer treatment. After conferring with the charity, he decides his donation will be used to establish an endowment that for many years will help pay for critical cancer treatment for patients who cannot afford to pay for it themselves.
• Marcia is very proud of being the first person in her family to graduate from college and has supported her university for many years with small annual gifts that help provide scholarships for students. Marcia's home is adjacent to the university campus and after talking with the university development office, Marcia learns that the school is hoping to expand its campus in the future. Marcia deeds her home over to the university, retaining the right to live in her house for the rest of her life (life estate). She receives an income tax deduction that year for a portion of the value of her home and continues to live in the house for the rest of her life, knowing her property will eventually be used by the university.

As you can see, there are many unique ways to be a philanthropist. I have only mentioned a few in this article. Philanthropy is an activity in which we all can participate in some way.

Before committing to any type of charitable arrangement, each donor should discuss the prospective gift arrangement with their family, legal and financial advisors, and the charity he/she wishes to support. This type of giving is very much a team effort.