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I’m very grateful for all the success I have had and am a firm believer in the importance of giving back. Through my efforts in memory of my late wife and what we do as a firm, I’ve tried to set an example for clients and the community at large of what philanthropy in action can do.
Although not everyone is philanthropically inclined, over the years I have found that many people who have achieved financial success also have a great deal of gratitude for the good life they’ve enjoyed. To some degree, they want to share their good fortune. That’s something I encourage among clients, telling them it doesn’t matter where you give; just find something that you’re passionate about and provide support.
In my work with clients, I use goals-based financial planning software and always include philanthropy in the conversation. To draw up a workable holistic financial plan, it’s important for the advisor to understand the depth of their client’s charitable inclination and what their goals are for annual gifting. Although each client’s situation is different, once I’ve established those basic parameters, I can draw upon some solutions I’ve used in the past to begin the discussion.
Let me give you an example of something I put into place for some clients in this past year. There was an older couple with no children, who were nearing retirement and had several million dollars invested with my firm. Their estate plan called for leaving the assets in their brokerage accounts to various nieces and nephews, but they also own an attractive lakefront property and some other assets.
I suggested creating an endowed fund through a local community foundation. Upon the couple’s demise, these assets would go to fund an endowment that would make annual grants to charities they had chosen in perpetuity. They loved the idea, so we set up an endowment and they seeded it with $10,000. They then updated their estate plan to earmark assets for the foundation, which would be the recipient of the assets and distributor of the bequests. We also had these assets titled for transfer on death, which allows the assets to be delivered directly to a named beneficiary without having to go through probate or be considered part of the estate for tax purposes. The foundation would then sell those assets and use the proceeds to fund the endowment and, in perpetuity, 5% of that fund would go annually to their designated charities.
Another tactic that I’ve used to help clients be both philanthropic and tax-smart addresses the issue of required minimum distributions (RMDs) from tax deferred accounts after age 72. For many affluent retirees, RMDs are more of an annoyance than a benefit. They don’t need that money to live on, and they’ve got to pay taxes on it. I regularly suggest to clients in that position that they donate their forced distribution to a nonprofit they feel passionate about and potentially avoid the taxes. If the gift is made in shares of stock, the client can get even more leverage because they’re avoiding the capital gains on the appreciated value of those shares.
My own story
While I was raised to believe in the importance of helping others and to appreciate the help my own family was given, it was a personal tragedy that was the impetus for much of what I’ve done.
My wife unfortunately lost her life in an automobile accident when we were both 40 years old. My wife had spent many years teaching children with disabilities how to swim, and I decided I wanted to use the proceeds from a life insurance policy to honor her memory. I started the Ingeborg A. Biondo Memorial Foundation in her name to support children with disabilities.
I didn’t want to sponsor programs that were already available through either federal, state or county agencies, but rather provide something in addition to that. One of the things I did early on was focus on the siblings of these children with disabilities because I found that in a family of two, three, four children, the child with the disability gets virtually 100% of the parents’ attention. I started doing things for the siblings like making sure they had a computer and were paying their monthly internet fee. We have a Christmas event called a “sharing party,” and this year we’ll have approximately 60 families with probably 100 children. Santa comes and gives out gifts and we give gift cards to stores like Walmart or Target. Those are things we’ve been doing since we started the foundation in the 1970s.
About 25 years ago, I came up with the idea of sponsoring children to go to summer camp. We thought it would be a two-fold benefit – atypical children would find out what it’s like to be in a summer camp and a typical child would find out what it’s like to cohabitate for a couple of weeks with a child with special needs. It got off to a slow start because most parents didn’t want to let their children go, but it is up to as many as 200 kids going to camp some years (although most years it’s around 150). We now have 11 camps that participate and, where necessary, we’ve paid to make adjustments like ramps and full-access bathroom facilities. That’s been the main focus of the foundation.
I’ve also been involved in my local community and built a totally accessible playground on an acre and a half of property donated by the town of Matamoras, PA. The playground is completely accessible and even includes a swing set that can accommodate four wheelchairs at a time. They have a ramp for wheelchairs that gets them up to about 15 feet and then the children can go down the slide. Our foundation makes an annual contribution to maintain the playground and continues to add new features.
When I work with clients, I ask them about their own philanthropy and if they are interested, I share my own story to let them know that if they are so inclined, my team and I will help them to maximize the good they do. Although this factor of philanthropy is often overlooked, it is something that strengthens communities, something we need more than ever today. We try to set a good example as individuals and a firm in terms of our own generosity, and when it comes time to discuss estates, we like to remind people that when someone passes it’s nice to do something in their memory. As always, the decision ultimately rests with the client, but a discussion of philanthropy should be included in financial planning.
Joseph R. Biondo is founder of Biondo Investment Advisors, LLC is a comprehensive financial services firm specializing in proprietary asset management, headquartered in Milford, PA with a satellite office in Sparta, NJ, the firm manages over $860 million (as of December 2021) of client assets and provides holistic financial planning, wealth management and thoughtful financial counsel.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
