All in the Family

Posted on April 26, 2010

All in the Family So, you’re children are grown and have moved out. They’ve scattered here and there. One may have stuck close to home, but the others have relocated to Chicago, the Carolinas, the west coast or Florida. I’m always pleasantly surprised to hear from former scholarship recipients or graduates of our Youth Advisory Council (YAC), who are seeking success throughout the country and the world.

You probably do your best to see your children, and your grandchildren on a regular basis, and if they’re like many I’ve talked to they still want to feel a connection back to this area. This presents a challenge to those of you thinking about your estate plans and an obstacle to involving your children and grandchildren in your philanthropy today. Involving your children in your estate planning and in your philanthropic endeavors now helps them better appreciate the benefits of giving back. Of the many values that you have passed down to your children, the spirit of giving back is certainly one of the most important. Those of you who are World War II babies, born in the 1940’s, and those born during the Baby Boomer years up to 1964, have demonstrated a charitable and philanthropic spirit never seen before. In 2008 total charitable giving in America was estimated at over $300 billion dollars, much of it coming from those two generations.

Let me propose a solution that meets your charitable goals today, yet one that also provides a mechanism for your children and grandchildren to maintain some type of connection back to this area… a Family Advised Fund.

Family Advised Funds, or Donor Advised Funds as they are legally called, allows a family to establish a charitable fund and award grants based on their own values, beliefs and goals. It is a great tool for an extended family to use, especially when family members are spread across the globe. With the available technology of the internet, your family can consider gift requests, research your favorite nonprofit organizations, and award grants—- all electronically. 

The biggest donor advised fund program in the world is managed by a global mutual fund investment company. With billions of dollars under their control they do an excellent job with thousands of donors making thousands of grants. But they’re not managed by people you know. They don’t live in your community. As good and as large as these for-profit companies are, they don’t have first-hand knowledge of what the SONS organization is doing for disadvantaged youth; what the needs of our local food pantry’s and soup kitchens are during this recession; how much work the residents of Algonac have put into their efforts at rebuilding their public pool facility; how important the arts are in St. Clair, or how important the Peoples’ Clinic is to our residents who are uninsured and underinsured.

A Family Advised Fund at the Community Foundation of St. Clair County can be established for as little as $25,000. Your extended family down south, or on the west coast, or overseas, can participate in your philanthropy. And just like those large corporate charitable funds, your Family Advised Fund, based here in your community, can make grants to organizations around the country.  You can support your grandchild’s youth group on the west coast, the Blue Water YMCA here at home, and your son’s alma mater in Florida. 

Those of you with estates worth several hundred thousand dollars, or even a million dollars or more, may be considering establishing your own private foundation. For those of you in this situation, I encourage you to ask your attorney or financial advisor if a Family Advised Fund is your better alternative. An advised fund is faster and easier to establish. They cost less to maintain and administer annually, do not have mandatory 5% payouts, and are not subject to any excise tax on net investment income. 

As we continue to slowly emerge from this recession your generous charitable and philanthropic spirit can keep playing an important role. If there was ever a time to “keep it in the family” now is that time. Your family, wherever they may live now, can still learn from you and give back to their hometown through a Family Advised Fund.

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