November 2016 – Women: First-Class Philanthropists

Recognizing those who mean so much to U.S. Charities

There is a saying – perhaps more an observation – that political history is made by men, but social history is created by women. Over the years and throughout history, men have tended to dictate the shape of the world in which we live, but women have designed the style in which we have lived in it.

As societies have changed, especially during the 19th and 20th centuries, women have come to the forefront when the world has needed their unique compassion and care for others:  Florence Nightingale, the “Woman with the Lamp,” searched the battlefields of Europe for the wounded and the dying:  Clara Barton, an American nurse who formed the American Red Cross, now a national and world-wide first responder to natural and man-made disasters;  Queen Victoria, a monarch of a world power and such a major influence in style-change that a type of architecture is named after her as well as an entire period of time, the Victorian age.

And many more women could be named who have made similar impacts that changed the world and influenced our societies. Men may frequently be recognized as the builders of wealth, but women will often have a major influence in choosing the charity and the causes that it supports.

How It Came About
It is hard to believe that less than 100 years ago – 96 years to be exact – women in the United States first won the right to vote in national elections.

It took almost 100 years to bring that about, with suffragists such as Susan B Anthony leading the way.  Today (as this newsletter is being written) a woman is the nominee of her party to be elected president of the United States.

With influence comes opportunity, and responsibility. Within the last few years young women now outnumber men at our nation’s universities and colleges. More and more women serve on corporate boards and are selected to serve as CEO’s of many companies. They are being elected to serve on community and state boards; they serve in public office on the local, state and national levels. In addition, they are slowly and steadily gaining and accumulating wealth that they have earned on their own.

In the past women gained wealth by one of three means: by the good fortunes of birth, then inheritance; marriage, then death of the spouse; marriage, then divorce and settlement. What those women then did with their new wealth depended upon the basic character of the individual woman herself. Some simply continued to live a privileged life style while others used their wealth to support charitable interests, especially those of the people from whom they received so much – parents and deceased husbands.

Types of Sharing
Tribute giving – giving to a charitable cause in the name of another person either living or deceased – is done three times more often by women than men.

The gifts often are sizable and may be in the form of dedicating a building, endowing a chair or empowering a charity to fund their mission.

If the gift is sizable, it is usually given through a Will.  This method of giving often reflects the sometimes more cautious nature of women. It guarantees to them the full use of their wealth during their lifetimes and then entrusts their legal and financial representatives to carry out their final charitable intentions.

Why women have been reluctant to explore and use other more sophisticated forms of charitable giving would be an interesting topic for discussion among women donors.

Other Available Methods –
The Charitable Remainder Trust
Because we are discussing sizable transfers of wealth from donors, especially women, the benefits of Charitable Remainder Trusts should be explored and discussed. Just as in a Will in which the gifts to beneficiaries are managed by a donor’s personal representative, the same is true of a Charitable Remainder Trust. The charity or charities named in the trust can be simply beneficiary(ies) of their estate planning.

There are two types of Charitable Remainder Trusts. While both offer more significant benefits than a Will for the donor, we are going to highlight the advantages of the Unitrust in comparison with those of the Annuity Trust.

If I were a wealthy donor with assets to spare (i.e. I couldn’t possibly spend all my wealth in my lifetime), I’d choose the Unitrust as the financial and estate planning tool to generate income for my lifetime for the following reasons:

1.  Flexibility.  With the Charitable Remainder Annuity Trust (CRAT) once the rate of return is set, that’s it.  You can’t adjust the income to reflect your current needs nor can you add to it by contributing more assets. But assets can be added to the Charitable Remainder Unitrust (CRUT).
An Example: Let’s say you fund the Annuity Trust with $100,000 of appreciated securities with an 80% appreciation. Because the gift has generated significant tax savings (in capital gains tax), you don’t really need actual income for two years.  With the Unitrust the trustee could adapt the investments so that there is no earned taxable income from the trust. Hence no additional taxes. There can be a provision in the Unitrust that the “lost” income will be made up (make-up provision) at some later date.

2.  More Flexibility.  Because you were cautious with donating your assets at first, and now are pleased with the performance of the trust, you would like to add to it so as to generate more income, avoid more long-term capital gains taxes on the sale of the assets and increase the legacy you will be providing for charity(ies). You Cannot Do this with the Annuity Trust. You would have to create a whole new trust with the all attendant costs.  This is No-Problem with the Unitrust. Only the trustee, your broker and your accountant would have to know about such addition of assets and be involved.

Suffice it to say, there are more ways than one to make a final gift and support your favorite charity(ies).  Regardless of your sex, you owe it to yourself, then to your family and finally to the charities that represent your lifetime values to plan your estate in the most efficient and cost-effective way.

For more information, please contact Parvati Hansen at the Janaka Foundation office: 530-478-7695, or by email at: parvati@janakafoundation.org