Are You Successfully Planning for Your Heirs’ Wealth?

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For many of us, discussing money can feel uncomfortable – especially with kids or grandkids. This can lead to unexpected and unfortunate results. For example, according to this TIME article, 70% of wealthy families lose their wealth by the second generation. Then, by the third generation, 90% of wealthy families lose that wealth.

That is why we are addressing ways to successfully plan for your heirs’ wealth, so you can feel confident in the future and your desired legacy.

Ask: What makes up your wealth?

It’s easy to misunderstand what makes up one’s wealth. We think: “We own our home, this many cars…” but then may forget to include other factors, like inheritances.

Make a list of everything that really does contribute. Also remember to think about what is and isn’t fully yours. For example, if you co-own property with family, that should not be counted as wholly your own.

Understanding the overall picture of what you have will allow you to plan most effectively.

Decide: How much do you want your children and/or beneficiaries to receive?

We understand this answer may not feel comfortable, and that’s okay. But it’s important to ask this – and start thinking about it carefully. Do you foresee your heirs receiving everything? Getting half – and the other half be designated for charity? Or another portion altogether?

If donating to charity, there already may be a nonprofit or organization – like an alma mater – you have in mind. If you’re still deciding, we have a resource to help: 6 Things to Look For When Choosing a Nonprofit to Support.

Talk: Have conversations with your children and beneficiaries

Because many of us feel uncomfortable talking about money, we don’t. This is very common, especially if we have a significant wealth. As cited here, 64% of high net worth individuals have admitted sharing very little (or nothing) about finances with their children.

Unfortunately, this lack of communication can be damaging. As parents, we have an obligation to educate our children. If they do not understand the wealth they may receive one day they may be unprepared to use it as we’d hope. (Here is an example. According to this statistic, the average recipient of a grand inheritance buys a new car within just 19 days.)

Managing money and being philanthropic are not generally intuitive; they are learned actions. That’s why we encourage people to:

  • Share how the family wealth was made, so heirs can understand their family background and where it came from.
  • Discuss values with kids and grandkids, so there can be a rooted connection built in philanthropy. It’ll help them learn why and how giving back is important.
  • Share with your family how you decide how much of your wealth to allocate to philanthropy. You can also share when you started giving back, the types of projects you support, any other information you’ve learned along the way that will make them better philanthropists.
  • Hold guided, honest discussions about what to expect. Will your heirs be able to use the money how they see fit, will there be an expectation to continue funding projects you had previously supported? Sharing this information ahead of time will allow them to be ready to receive the money and they’ll be more likely to steward the funds as you’ve envisioned.
  • Involve your heirs now. As mentioned, philanthropy is a learned action. Bringing your heirs into the conversation now will allow them to see the decision making process and have a voice at the table. Whether you decide on a family project together or give them a small amount to designate on their own, they can begin to learn how to research nonprofits and decide which programs to fund.

You have a vision in mind, and if you have open conversations with your heirs – they can feel rooted in sharing that vision and putting it into action.

We are here to be a resource for you, too. If you would like to discuss your philanthropy or get help deciding on a nonprofit to support, please give us a call at 858-756-6557.

6 Things to Look For When Choosing a Nonprofit to Support

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It can feel challenging to select the right nonprofit to support; this is a common phenomenon. You want to help a cause you care about, while also making sure you’re working with an organization that’s making a true, significant impact.

That’s why we are sharing 6 things donors should look for in a nonprofit, so you can select the right one with confidence.

1. Decide what you’re passionate about.

Think back to the last time you read a newspaper or online news. Was there a story about a problem in the community, one that really resonated with you? Perhaps you read about a low income student receiving a college scholarship, a pet rescued from an abusive situation or a group addressing homelessness nearby.

The topics that stick with you help reveal what causes are truly close to your heart. Remember this next time you are online or watching TV news; it’ll help pinpoint what type of cause you want to help most. Then, you can look for a relevant nonprofit.

2. Remember, it’s about the small steps

Individually, we cannot take on an entire issue, but by getting involved and supporting the right organizations, we can help tackle the problem in smaller pieces. For example, wanting to put an end to homelessness in San Diego is an admirable feat – it’s also a big, overwhelming issue. However, by supporting a cause that helps get people jobs and keep them out of homelessness, that’s a way to take on the problem in a more manageable, highly impactful way.

3. Use local resources to your advantage

At the Rancho Santa Fe Foundation, we are here to be a resource for donors and nonprofits in the community. Visit our website and submit your question; we will be happy to walk you through these steps and address other questions.

You can also use online resources, like our San Diego Directory: A list of trustworthy nonprofits in San Diego serving the military, veterans, and their families we recommend based on careful research and rigorous evaluation.

4. Look at similar organizations

It isn’t a secret that there are multiple organizations working to address similar issues. Research a few and decide which ones most closely align with your philanthropic goals.

At Rancho Santa Fe Foundation we encourage nonprofits to collaborate. We like to support programs where multiple nonprofits are working together to tackle an issue.

5. Create a relationship with an organization.

Naturally, you want to make sure your support goes to an organization that’s making a true impact. To find out if they’re doing the good work you desire:

  • Read their website for more information.
  • Reach out to them and ask questions. In what ways can you help this cause? What are their programs for the coming year?
  • Get involved. Attend an event, sign-up to become a volunteer, ask for a site-visit.

These steps will allow you to get to know the organization and those involved; you’ll be able to clearly see their impact and know if you want to get more involved.

6. Long-term philanthropy is great; spontaneous nonprofit support is, too

Taking the time to vet and understand a cause and nonprofits is great. However, we certainly rally for more spontaneous help, as well. There are some types of giving that cannot be planned for. For example, perhaps a natural disaster strikes. Then, an ad on Facebook asks for texts of $10 donations for relief support.

If you have the means to support these campaigns in the moment, then get involved. There is great power in immediate emergency crowdfunding.

Ask yourself: “What kind of donor am I on a shorter term or spontaneous level?” If you like to give to a variety of causes and spontaneous efforts, monitor that – and factor it into your long-term, more intentional giving efforts.

Last, but not least

Overall, the most important message is to get involved; don’t just sit on the sidelines. When we take the personal responsibility to get informed or call a community foundation, like RSFF, to learn more – we are taking important steps to helping a cause.

These small efforts, like reading up on this information right now, all add up to make an amazing impact.

Philanthropy 365 Days a Year

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The beginning of the new year means many things to many people. With the holidays behind us and the anticipation of a new fresh beginning, it is a good time to reflect on the blessings of our lives and goals for year to come. It is a time to focus on how we can accomplish good and noble things for our community’s most pressing needs.

Giving End-of-Year vs. Throughout the Year

What is interesting is that year-end is often the only time most people intentionally focus on their philanthropy, not consciously thinking about the fact that the needs of these causes and organizations that they support and care about are ongoing – 365 days a year.

Mid-Year Appeals

Another important fact is that the fiscal year-end for most nonprofits is not December 31st. It often falls on other dates, most typically mid-year around June 30th.

What does this mean for the nonprofits we support?

That their need for financial support may be greater either right before or right after the fiscal year-end rather than the traditional end-of-year.

Here’s an example. Let’s assume that a nonprofit has a June 30th year-end. As they are finalizing their budget for the next fiscal year, a donor contribution early in June will enable that charity to close out the current year in a stronger position and strengthen next year’s budget.

In short, it is a good idea to talk to nonprofits you support and ask them how and when your donation can make the most impact.

Timing is Everything

At this time of year, mailboxes are no longer flooded with end of year appeals. This is a relief in some ways, but it is also a good time to consider how you will support the causes that you care about the most. We recommend using this time to plan how often and at what time of year you will send your support.

Open a Donor Advised Fund at RSF Foundation

A donor advised fund is a simple and effective way to begin or continue your philanthropic journey. Here is how it works:

  • Receive an immediate tax deduction for your contribution
  • Transfer assets of many kinds into the fund: cash, appreciated securities are the most common
  • Recommend grants to qualified nonprofits of your choice any time
  • Simplify tax reporting

Year-Round Deductions – Made Simple

  • Donations of cash are deductible up to 50% of Adjusted Gross Income (AGI). Donations of appreciated securities held long term (more than one year) are deductible up to 50% of AGI.
  • Please contact the Rancho Santa Fe Foundation for information on other options.

Philanthropy is not intuitive for most people. More often, it is learned through experience. To make a true impact, though, it should be “top of mind” 365 days a year.

Mark Holmlund named Chairman of the Board of Directors

Mark Holmlund, Rancho Santa Fe, California

The Rancho Santa Fe Foundation is pleased to announce the appointment of Mark Holmlund as Chairman of the Board of Directors. Mark has served as a director of RSF Foundation since 2012. He has held the positions of Chair-Elect and Chairman of the Governance and Nominating Committee, and he currently serves on the Investment and Finance committees.

Mr. Holmlund retired at the end of 2010 after a 25-year investment career, including 17-1/2 years with Pacific Life Insurance Company. His last positions held were as Chief Investment Officer for Pacific Life and President of the Pacific Select Fund and Pacific Life Funds. His responsibilities included managing a $25 billion fixed income portfolio and overseeing a $1 billion private equity portfolio for the Company’s General Account. He also had oversight responsibilities for the two Fund complexes which totaled over $50 billion in assets. Mr. Holmlund graduated Magna Cum Laude from Willamette University with a BA in Economics. He earned his MBA in Finance from the University of California at Los Angeles, Anderson School of Management. He currently serves on the Finance Committee and chairs the Investment Subcommittee for Sharp HealthCare. Mr. Holmlund and his wife Candise have two sons.

The Rancho Santa Fe Foundation is a community foundation that provides charitable funds and expertise to strengthen philanthropy throughout San Diego County and beyond. With growth to over $90 million in assets and over $50 million in grants since 1981, the RSF Foundation continues to expand its community impact.

Through donor advised funds, endowment funds and planned legacy gifts, many philanthropists and nonprofits partner with the RSF Foundation to make an impact with their charitable funds. With programs that focus on collaborative giving, the RSF Foundation provides grants for nonprofits serving military service members through The Patriots Connection and a vulnerable senior population through North County Senior Connections.

IRA Charitable Rollover Benefits Philanthropy and Older Americans

Older Americans, Rancho Santa Fe, San Diego, CA

The IRA Charitable Rollover strengthens philanthropy and reduces the tax burden on older Americans. Now that Congress has made this provision permanent, it can be an important part of an effective charitable giving strategy.

The IRA Charitable Rollover Explained

Individuals are required to begin taking minimum distributions from their Individual Retirement Accounts (IRAs) when they reach 70½ years of age. These distributions normally are subject to income taxes. The IRA Charitable Rollover provision allows these individuals to donate any amount up to $100,000, without treating the distribution as taxable income.

The IRA Charitable Rollover and Donor Advised Funds

Currently, the IRA charitable distributions cannot be transferred to donor advised funds, supporting organizations or private foundations. The distributions must go directly to a public charity and be made from traditional IRAs or Roth IRAs. The Rancho Santa Fe Foundation is a 501(c)3 public charity and can be the recipient of IRA charitable distributions.

Why the IRA Charitable Rollover is Important

Simply put, this provision is an incentive that strengthens charitable giving and reduces the tax burden on older Americans. The nonprofit network organization, Independent Sector reports, “In the first two years the IRA Charitable Rollover option was available, more than $140 million was donated from IRAs to support the work of public charities across the U.S. The median gift was just under $4,500.”

A Brief History of the IRA Charitable Rollover

The IRA Charitable Rollover provision was established as a two-year temporary measure in the 2006 Pension Protection Act. The provision was allowed to expire in 2008, was renewed temporarily two more times, and then expired again in January 2014. In a significant milestone for philanthropy in America, Congress voted to make the IRA Charitable Rollover permanent law in December 2015.

RSF Foundation Announces Associate Director

Sue Pyke, Associate Director RSF Foundation, San Diego

Sue Pyke, Associate Director, RSF Foundation

We are pleased to announce that Sue Pyke will become the Associate Director of the RSF Foundation effective September 1, 2015.  The Associate Director is a new position at the Foundation.  Sue will have strategic and operational responsibility for the staff and programs, as well as relationship development with San Diego nonprofit partners.

More than 55 nonprofit organizations have established endowed or non-endowed funds at the Foundation. Sue’s experience with strategic planning, nonprofit governance and donor relations will provide a high value to the Foundation and the nonprofits that partner with us.

Sue has been with the RSF Foundation for three years as Donor Services Director and as Marketing Director. Prior to moving to San Diego in 2008, she lived in Hanover, NH, where she was a founding board member and vice president of the international nonprofit, Lwala Community Alliance.  Locally, she has served as board president of GenerateHope and worked as development director at The Cambridge School.  Sue has a B.A. from the College of William and Mary and a M.A. in Nonprofit Leadership and Management from the University of San Diego.  She has three grown sons and lives with her husband in Del Mar.

The time is perfect for Sue to step into her new role at the Rancho Santa Fe Foundation as we expand our ability to facilitate significant grants to the community and to provide the leadership necessary to bring our donors together in support of issues that are critical to the future of the San Diego region and beyond.  Please join me in welcoming Sue to her new role.

Why Outcomes are Important in Grantmaking

[Editor’s note: For our occasional series on Philanthropy Insights, Christy Wilson writes about grantmaking at the RSF Foundation.  Mrs. Wilson is the executive director of the RSF Foundation.]

Christy Wilson

How do donor-directed grants work?

The Rancho Santa Fe Foundation, as a community foundation, is fundamentally a grantmaking organization. We accomplish this goal in many ways. Donors who establish donor advised funds may make recommendations for grants from their fund to any qualified 501(c)(3) nonprofit organization, or a foreign equivalent.

Many donors wish to establish designated endowments for a specific nonprofit or cause that interests them. These funds are subject to the endowment spending policy of the Foundation, but typically make annual grants of approximately 5% to the organization(s) of the donors’ choice.

Is the Rancho Santa Fe Foundation a grantmaker with its own funds?

Beyond being a vehicle for individual or family philanthropy, the Rancho Santa Fe Foundation also provides community leadership as a grantmaker through our Community Impact Fund. Many donors have contributed to this fund over the years to make it possible for the Foundation to address both urgent and ongoing needs of the community, locally and regionally.

The Community Impact Fund is currently funding a three-year initiative, North County Senior Connections, which addresses the needs of vulnerable seniors in North County San Diego who lack access to healthy food and opportunities for socialization. The RSF Foundation is funding half of the $800,000 budget, and the remainder will be in collaboration with other funders, such as private and family foundations, operating foundations and individual donors. After just the first 90 days of this program, more than 1000 meals were served to nearly 200 people, exceeding the project goals.

Grantmaking for outcomes as well as outputs

In the last several years, the world has become much more dependent on data gathering, data analysis and measuring the outputs of our actions; for example, how many people voted, what was the result of a vote, and what changed as a result. This is important information to have and to understand.

But a grantmaker must also understand the outcomes and life-changing events that ideally will occur as a result of our ability to fund these programs. For example, did a four-year-old child who was able to enroll in a Head Start program ultimately attain better grades, read more proficiently and realize his/her dream to achieve a college education because of a pre-Kindergarten program? Grantmaking is more about achieving positive outcomes rather than just achieving “the numbers.”

As the RSF Foundation supports North County Senior Connections over the next two years, we, along with the two nonprofits that provide the services, will be tracking the attendance and the number of meals served. But more importantly, we will evaluate the change in overall health and improved quality of life of those who are attending on a regular basis, as well as those who are taking advantage of opportunities to access other services and case management. Our goal will always be to touch lives as well as change them for the better.