The world needs more impactful, local charitable giving, says Nathan Merrill. Giving without an expectation of anything in return, this is the subject today. And this act provides more benefits than many people think. We discuss the physiological effects of service, and how this helps the mind and the body. Think about how to help people within your circle, including the people you work with. You may be able to help people in ways you had never imagined. Nate and Karl discuss three ways of giving, by showing up, by delivering the high-level skills that made you wealthy, and by just plain old writing a check or using other financial tools. And what about the single people, and/or people without children? Finally, some deep thoughts about the tax deductions and how they test a person's conviction about the charities...would we give without a tax benefit?
Resources mentioned in today's podcast:
As always, it is good to have an expert on your side.
[00:00:00] Welcome to the Expert Network Team Podcast.
The deeper and deeper I get into charitable planning when it, we see things like the Bill Melinda Gates Foundation and. They're doing great work. Yeah. Huge foundation, but there's so much opportunity for impactful. Local. Local. You don't need that kind of small stuff. Yeah. And just like with government, the more we rely on government to solve people's problems, the more we rely on the mega charities to do it so big, the less that seems to get done sometimes because there's so much intimate need in communities that, I think the world would be a much different [00:01:00] place. And I sometimes wonder if it'd be a better place without the large mega charities where everybody just assumes huge organization red Cross is gonna take care of this United Way, whomever, if there were more of these Amish people who just decided to pick up one weekend and go down and build someone's house, like power of a small number of.
Hardworking, determined people. Amen. So that would be my message to anybody is philanthropy in the broad financial sense is great and probably could and should be a part of everybody's plan. Yeah. But direct immediate impact stuff is going to be the things that the more I study, the human psyche and the.
The, even the physiological byproducts of gratitude and giving, always coming back to this. So much of our personal [00:02:00] health and wellness and mindfulness is tied up in things that we seem to disconnect from that. But gratitude and giving have tremendous. Physiological byproducts that we're missing if all we're doing is giving at the office.
Writing a check does not have the same, and this is I'm quite confident there are studies on this. Writing a check does not have the same dopamine or endorphin hit that going out and helping the old lady across the street. What I mean? Yeah, I know exactly what you mean. That's what I'm thinking too, that, we can set up whatever we want in our, automatic, payroll de deduct or whatever deductions are from wherever it comes from. And we can, I gave at the office, I can change a beneficiary so that I'm leaving a really big number of a death benefit for a life insurance policy. Or I can change a beneficiary of my state to do or I can do even a big, stock donation to a [00:03:00] big organization where I can get the biggest tax deduction, right? Because these smaller donations, smaller organizations have a smaller immediate tax benefit. Often if it's a, if it's a community foundation, it's too small, but you're onto something there that I really wanna dive into a little bit further, and that's how does it and I feel good, right?
I feel good. And maybe I get some of these benefits if I go to an event or something. And do whatever they're doing. Or I do the ice bucket challenge or I do the, I'll go climb a big mountain or run a marathon and raise money for, or ride a bicycle and Right. Do a hundred Century run Susan g Koman.
Yeah. Susan, which is a great charity actually. Yeah. It's a huge, it's a bigger one. And there's others in Colorado that are really good too. Like that, that, you can think about, but what would it, what a difference that might make in my own body. To give, there's something you're saying there that maybe we need to get, there's a physiological response to Ricky Roselo back from a prior podcast [00:04:00] or a different doctor and, 'cause Yeah, I think you're onto something.
I naturally my health feels better, my mind works faster, my spirits are up. I'm more optimistic about other things. I help and I help and I know I've read stuff to that effect in composite with broader health books that I've read recently. Yeah. But it would be interesting to identify some resources, right?
That strictly focus on the physiological, the health byproducts of what different types of philanthropy, because again, just giving is not the same as doing. And that's something that I know that in our church it's both you tithe, but you also engage in regular service with people in your community.
Yeah. Yeah. I think that's the right way. I think a lot of the, I think a lot of the best churches are that way. Yeah. Yeah, a little bias there, but yeah, I think the active churches are the most fun churches, right? Then, but I think a lot of that has to do with the physiological effects.[00:05:00]
Both the sacrifice and the, I think, a lot of times service tends to be the greater service opportunities or the more frequent ones are the helping someone move. I. It seems small. Actually and helping the elders in the community who need help. There's people who get sick, mowing the lawns, they're bringing food.
You can do those types of things for the people who is, part of your extended doing their shopping for 'em. Yeah. Extended. And there's community. It's a big deal. And so there's a good example of what I'm talking about, like you can, and I know I do this when I talk with people about powers of attorney, you can get someone to do all that work.
You can pay to have it done. Same can be true of charities you can hire. Yeah. Or you can just have Walmart do the shopping for them. But how much different is it for you? As the chair, rather than writing the check for the groceries to actually go do the groceries and deliver it to their door makes a huge, and see their face as they're receiving it.
And making that human connection [00:06:00] with the individual. I just it's different. Yeah. So now, strangely we're moving from the financial aspects of giving into the what really is going to impact you as a giver, as a charitable person, what's gonna make you more charitable? If we go to the biblical sense of to, charity and to be found with charity at the last day and all that sort of stuff, what does that mean?
You just wrote a lot of checks or does that, is that who you've become? Because of the charity. Has it changed your heart? Yeah. Changing your heart. That's a very different discussion than it is. Yeah. There's only one power that knows the answer to that, right? I, but I think there's something too, just giving for the sake of giving that I think, these other benefits naturally want you to do more of it.
It's a little bit like I'm feeling a little grumpy. I don't want to go for a walk. I don't wanna go for a run. I don't wanna exercise, I don't wanna do whatever it is that I need, that I know that when I do it, I feel [00:07:00] better. But right before I do it, I'm feeling a little bit of reluctance.
And that's the, I think a lot of people are stuck there on the charitable giving side too. Like I think they know that they'll get these benefits on the other side of it, but right before they make the gift or right before they decide to sign up for Habitat for Humanity and swing a hammer or.
Grab a paintbrush or just write a check, whatever it is that or do some pro bono work with their area of expertise for a charity, whether it's financial or legal or whatever. All the other ways that people can be of service, work at a soup kitchen, all the things that we can do work at the hospital.
That's a, you've got this little bit of hesitancy. Yeah. It is funny to, to go on the, we did, we have, in our. Advanced tax strategies group called the Grow Group, which I can't remember if I've talked about it. Interesting. But it's, grow stands for something and it all has to do with growing as an individual.
And we read a lot of books, but we get within the company. Yeah. We get together once a quarter and we do a team building activity. And last [00:08:00] quarter our team building activity was going to a food pantry and assisting at the food pantry. And to your point that. It does not sound as fun as the go-karts, which is what we did the time for.
For yeah, our activity. But I was surprised at how. Rewarding. It was, yeah, in a very different way, like being able to stand around and talk to our colleagues as we're helping people through who are down on their luck and needing the food assistance and serving them, helping them out to box it and take it out to their cars and I don't know that they knew they were dealing with people who.
We're lawyers and successful professionals. They just were grateful to have the assistance and we were grateful to have the opportunity to provide it. And it was a great cohesive team building experience to do something like that. And I don't know, we're not the only ones, but it was just don diminish it.
A more recent example of and [00:09:00] so you gave together, you experienced together and you grew together. It sounds like something you should do. Again, I. Yeah. I think every year we'll do one, at least one charitable team building Yeah. Activity. Yeah. Yeah. I think it's a great idea. And if it weren't for the time, that's something I could see us doing.
It was so easy. It was just like, yeah, two o'clock to, or maybe it was one o'clock to I. Four o'clock or whatever it is that closed it. Yeah. And now that we know the routine, like we can go down and just plug right in and do the thing. Yeah. And that's a nice way to think about it. I, if you go as a team you're getting these team benefits and you're trading time for the team benefits, you're trading time for the charitable feeling you're trading.
It's not a high level of skill that you provided, but y'all have strong enough backs and. And a friendly enough demeanor, and you were responsible enough to do the job at hand. And then there's probably another level of that might be a different set of rewards, but it might not be better.
And that would be, I. Okay, so now you're gonna go and same charity. I don't know, maybe they need legal advice and so you could go in there and help [00:10:00] them with whatever that service might be. Or maybe there's a contract that needs to be worked out or whatever it is. All the thing you've got, you guys have attorneys that do contracts and attorneys that do employee employer relations, and then obviously the estate planning and all the advanced planning that you do.
There's all sorts of attorneys. All sorts of ways that a charity might be able to level up. But that would be a different set of rewards, right? Oh, huge. Hugely different. That's what I'm saying, like being on the ground with those people helping, like looking them in the eye is very different than helping the organization out with the contract.
Yeah it's greeting each one and we probably processed. A couple hundred people and just helping them through the, because they weigh the food and then you take it out and you list immediate satisfaction. And just it's humbling to see, and I think that you don't get that kind of behind a computer screen or doing the high level where you get your higher pay.
You, you're seeing the people who are like. This is all the food they'll have for the next week. [00:11:00] And it's, it makes you grateful. Talk about what gives you gratitude, it makes you grateful and see how much extraordinary a bounty and abundance you have, we have, it changes your perspective. Yeah.
And that's where I say that I know there's data on the physiological byproducts of gratitude. Sure. And physically getting in there and doing it and how that produces those things. 'cause just writing a check, there's data tracking it, whatever they measure in the brain and then heart rate and all other sorts of things that doing it has a bigger impact than just writing a check.
They're writing a check. It sure seems to me like you could do both. Oh, sure. I. It sure seems to me like you could have, and maybe the, the check writing and then the higher level, skills related executive, high executive functioning work that us and most of our listeners have, probably all, every listener and then all of our our just showing up and [00:12:00] doing the physical work.
All three ways of giving. And with this one we did, we actually did a food drive before we went down. So we actually, we didn't write a check per se, but we gathered in food for them to provide to people. Then we saw how it would be handled too. It is just I wish I understood it better, except for I can say that there's a distinct difference between giving of resources, which is important, but also giving of time, efforts, and energy.
And like you say, they're both, I think, critical components to developing ly. Yeah. And then as you take that into the family mission, imagine doing those sorts of things as a family. As a family, how that would grow. Yeah. Everybody would feel better. We're gonna give to this charity. Yeah. Money, right?
But we're also gonna go down and engage with them and do the work on, and see the recipients and see the impact that, that charity's making. Yeah. And it might actually be an easy way to get into [00:13:00] the mission. Now that I think about it, that's how we backward it into the three types of things that, that we do.
And it's because we were already interested in that. We had already started to do some of the work in the HA in the ground and started to give bigger amounts of money and those, and giving our skills and time and talents. And so then we backward it into. Okay, this is where we need to limit our resources 'cause we have all these things.
But from there you could even build a mission for something that could be more lasting and say, for our family, if we make an impact in this way, we will have achieved much of what we want to achieve. And to close, maybe, perhaps close out this part of the conversation. A practical example, I have a client who, with their family, they've moved through, they've worked with more than Money 360, who we've talked about in another Yeah.
Previous. And one of the things that they chose as a family project was philanthropy to come up with a way that they can work together beyond just picking charities and giving money. And so what they came up [00:14:00] with is the parents would provide. The G two group some money, and we talked about setting up an LLC so they can learn governance and committee.
They can operate it like its own little charity without being a charity, but Right. I love this idea. They could teach them investment strategies so that they would earn money in every dollar of profit would go to charities. So it basically is a way for them to earn money to then redirect to charities.
So they're incentive impact investing. They don't get to just deplete the fund, right? It's only the profits derived from the fund. So they learn investment principles along with giving principles. And then you just continue to grow this thing. You can compound your impact, right? And yeah, that was part of it was that they didn't have to give away all the money, but they had to give away at least a certain amount so they could grow the fund.
But they had to at least have, similar to charities the way charities work is or private foundations, you have to give away 5% [00:15:00] net of expenses. Every year. Yeah. And what some people, which makes sense, what some people do as a tax strategy comes to gain this is to have your operating expenses to be, salaries to family members and whatnot.
Be so high. Yeah. That the amount you're giving away is actually minimal. That's defeating the purpose, I think, behind, yeah. What that tool could be to people. But in this case, they basically just said the charter will constitute. We'll function towards charitable giving by basically mandating that the profit go ultimately to charities and it's up to them to work together to decide what charities, how much, and that sort of thing.
It holds the family together, gives 'em a little reason. It's the goal, and it'd be pretty fun for the third generation too, to grow up in there. And if the money lasts that many generations, we've already the money's already outlast most. At least money. And that's when you get into the larger amounts.
This was a, not modest, but it was a, yeah. As I mentioned before, [00:16:00] I used to say 5 million, but if you had 10 or 15 million going into a private foundation, I'd use a private foundation because of its tax free nature. Yeah. And then you can afford the cost of maintaining compliance and staying people without kids are charitable, and that's a great conversation too. Sometimes they're more charitable because they know that they're not gonna have a biological descendant, and they'll have ways, they'll have desires and they could really sometimes get a kickstart too, because maybe they've accumulated enough money that they're, it's going to outlive them.
And they're pretty confident in that, right? They're not worried about that so much, but they also don't want to just give it away and then destitute themselves later in life, right? When they become a charity case. So there's an interesting opportunity to also discuss the overlap between charity and gifts because, I have some clients who are in a situation like you described, but they don't have philanthropic inclinations.
Their charity is to take care of people that they care about. Yeah. Okay. And so they're leaving their money, [00:17:00] even though they don't have direct posterity. They're like this secretary has worked with me like for the last 30 years. I want to take care of her family. Yeah. You care about them. Sure.
That is charity, even though we call it by a different name called. Generosity. Generosity is can be charitable. Absolutely. It's just not a tax deduction. Yeah. I think that's a really important thing to do. And so that gift in the office space, obviously the, a taxable event for the recipient, unless it was delivered to them in a retirement plan, a tax deferred?
Or just a bequest, like in this case it would be a testamentary request. So Yeah. So after they pass, yeah, after the loss. That wouldn't be compensatory for sure. Business would be able to let them. Inherited afterwards. Yeah. And just to, I think we talked about that when we defined what a gift what a gift is.
Yeah. It's hard to be charitable or a g it is hard to have. Detached and disinterested generosity of love and affection for an employee, it's, it is inferred that it doesn't exist in an employee relationship. So that's where it can be [00:18:00] challenging to be gratuitous with employees outside of just paying them more.
It's more than a myth, right? We literally have. More than one client in our firm who did have the rich uncle, or who is the rich uncle. It's not just a myth that there are relatives who can be pretty distant, who can all of a sudden bequest a a meaningful amount of money to a grown adult who's a stranger of, or maybe even a younger person who's, best friends with this rich uncle or other relative.
And so that can be a really different experience, can't it? Because it could certainly have. Maybe made a bigger impact while that person was alive, but sometimes relationships just prohibited. What are your stories or recommendations for people who don't have direct lineage to leave it to and read the book?
Die With Zero. And that, again, that book. Promote some ideas. I'm not a hundred percent com comfortable with, but it does address exactly what you're talking about, which is Yeah, we did a podcast on that. Yeah. If you [00:19:00] can give and have those gifts, see them while you're alive, assuming that you don't gift away all of your resources.
Yeah. For, but having an impact on people while you're there is pretty cool. Is better than leaving a big pot of money at the end of the day or doing things with those people, or helping them with education, helping them increase their lot in life are things that are pretty cool, are opportunities for people who don't have a legacy.
To create, if that makes sense. It does. And it's one thing to inherit money, but it's another thing to inherit the knowledge that created the money or to learn that knowledge. Teach man fish relationship. Yeah, exactly. Exactly right. Yeah. And one of my, and again, I don't consider this part of my charitable.
Or philanthropic plan, but part of my mission in life is to help [00:20:00] people lift themselves up. And that's not done through charities. I do that direct, yeah. Work. Yeah. With my work and just with, whenever I find an opportunity to help someone even though it may not be tax deductible, if I can help them improve their lot.
This is the weird thing for a tax attorney to say, but we shouldn't and maybe this is why I approach this conversation the way I did. All our charity need not be tax deductible. All of our all of our philanthropy does not need to be maximizing Yeah. Tax benefit. Yeah. Dialing both of those back might have us approach both differently.
And I remember when back in 2017 when they were coming up with some of the tax proposals, there was one that would've eliminated charitable contribution. Oh, I remember deductions. That for a while. Yeah. That was a big, that was a big deal. Yeah, it was a big deal. But I had [00:21:00] to. I value it on a couple of levels is charities that are actually doing the thing that they say they're going to do will be fine.
It's charities that don't do anything where you're then begin to wonder, why am I giving to this charity if they don't actually do anything? Those would be the ones who would struggle financially because then your only reason for giving would be to have impact, and maybe we need to return to some of that.
It's the thought I had at the time. Yeah. And secondarily, especially religious. I'm not gonna stop paying tithing just 'cause I can't deduct it anymore because I view that as a religious right or obligation. It's spiritual to me, not tax related. So it would really test people's convictions around certain charitable endeavors to remove the tax incentive entirely.
I thought at the time that would be an interesting social experiment. Obviously it didn't work out that way, but. Sometimes people should evaluate, would I do this thing if I wasn't getting a tax deduction?[00:22:00]
Really good question. I think we should Makes sense to me. Yeah. Hopefully every charity we're currently donating to, we would still feel strongly and say yes, but if we don't, there's a sign and I have stopped giving to charities based on. The, their shift in mission statement or mission purpose yeah, sure.
I think we've all done that. Yeah. Yeah, I can absolutely immediately think of one, that changed direction, I thought, not for me anymore. And then, yeah, even a second one. I'm. Just starting to think about the topic. Yeah. Not for us. Not for us. They changed. We, maybe we did too.
But anyway, it's not, we're going into, and that's a good assessment of why you're giving, are you giving for the tax deduction or are you giving, that's a way to get back to the tax to the why. Yeah. That's a way to get back to your mission. That's a way to get back to, okay, these are not the charities that are meaningful to me.
[00:23:00] Maybe I need to avoid that whole category of any closing thoughts? Yeah, my, my summation or my impact filter on this one would be when it comes to these strategies that you lay out in your book, when it comes to you thinking about your family, Phil philanthropic plan. Remember that charity is more than giving.
It's a mindset. It's a state of mind that is charity. That's where you're gonna have the biggest benefit. Yeah. And and that should be part of any family philanthropic mission statement is not just the. Economic impact, but the personal impact, what you're getting from the activity should be a very strong consideration for [00:24:00] any 'cause.
Otherwise, it's just writing a check. Otherwise it's so meaningful. Yeah. Yeah.
Thank you for joining us today. I hope you enjoyed the discussion and the information we shared. We hope you enjoy the information contained in today's podcast and find it useful. We hope you'll join us again next time as we explore new areas of interest to our listeners or current issues we believe are.
Board to discuss. If you enjoyed this podcast, please subscribe so you are notified when future episodes are released, and also share it with a friend that you think would benefit. If you'd like to meet with a member of the expert network team or have a request for a special topic you'd like to have us discuss on the podcast, submit those requests to info@expertnetworkteam.com.
That's I nfo@expertnetworkteam.com. Thank you for joining us and have. A great day. Thank you for listening to this podcast. We want to remind [00:25:00] you that listening to this podcast does not establish a client professional relationship with any of the professional firms represented, including guests, nor does it constitute legal investment to counting or other advice of a fiduciary nature.
The views expressed are those of the professionals only investment advisor, wealth, secur Wealth.