Wednesday, July 17, 2024

Embracing the season of giving with purpose and impact


This is the twenty-ninth in a series of informative monthly articles for North Carolina businesses from PNC in collaboration with BUSINESS NORTH CAROLINA magazine.

From the sound of coins being deposited into red kettles to the warmth of donated coats at winter clothing drives, the spirit of giving appeals to every sense during the holiday season. Add to that the impending deadline for securing end-of-year tax deductions and it’s not surprising that as much as 30% of charitable giving activity in the U.S. occurs during the month of December.

The confluence of holiday goodwill and year-end financial decisions often motivates donors to consider strategies that can help maximize the charitable impact of their contributions and reduce income tax liability, from submitting employer matching gift requests to making qualified charitable distributions (QCDs) to public charities from individual retirement accounts (IRAs). While these methods can help some donors achieve their philanthropic objectives in the near term, PNC Private Bank leaders encourage families to lean into the togetherness of the season and consider the long-term impact they can create through defining their purpose.

“Discovering and articulating the ‘why’ behind a family’s purpose is foundational to creating lasting impact and legacy,” says Raleigh-based Denny Terzich, who leads PNC Private Bank in the Carolinas. “Our teams fully understand and appreciate that each family has its own unique dynamics, values and goals – and we work closely and collaboratively to help them deliver on their purpose within the context of a comprehensive wealth plan.”

Terzich and Greensboro-based David Leppert, PNC Private Bank’s wealth director for the Western Carolinas market, point to a variety of planned giving vehicles that high net worth individuals and families may consider leveraging.

One strategy that is sometimes overlooked for its simplicity, says Leppert, is designating a charitable organization as a beneficiary within a donor’s will, retirement plan, IRA, life insurance policy, annuity or any other asset that passes by contract.

David Leppert and Denny Terzich

Another strategy, which has increased in popularity in recent years because of its lower monetary threshold and ease of administration, is to establish a donor advised fund (DAF), a charitable fund sponsored by a 501(c)(3) entity. By giving to a DAF, usually managed by a financial institution, public charity or community foundation, a donor may receive an income tax deduction at the time a contribution is made – and then makes recommendations for distributions to charitable beneficiaries over a longer period.

“A DAF is particularly helpful for donors who are interested in front-loading their giving for tax reasons, while also having the flexibility to research and select charities to fund in the future,” says Leppert.

Private family foundations continue to be both popular and useful in a stack of vehicles to drive change or support a specific cause. While administratively more involved, irrevocable and requiring a deeper financial commitment, a private family foundation is often the cornerstone of a family’s sense of purpose and community involvement.

For families seeking to manage an asset to provide both income and a charitable gift, a charitable remainder trust provides an option for donors looking to achieve this dual purpose, says Terzich. Charitable remainder trusts can be funded with qualified appreciated stock, cash, real estate or other tangible property. Donors retain the right to a stream of payments – either a fixed amount, such as with a charitable remainder annuity trust (CRAT), or a fixed percentage of trust asset value, such as with a charitable remainder unitrust (CRUT). Payments are made for a number of years or for the life of the non-charitable beneficiary. When the trust ends, the assets pass to one or more charitable entities.

As Terzich, Leppert and colleagues advise families on all phases and aspects of wealth planning, they acknowledge there has never been a more consequential time for individuals and families to translate their purpose into impact.

“As we embark on what experts are calling the greatest generational wealth transfer in history, families are placing an increasingly pronounced focus on making arrangements to pass down, preserve and continue to grow their purpose,” says Terzich. “This entails helping prepare a new generation for the responsibilities and opportunities that accompany a transfer of wealth.”

In the ultra-high net worth and family office space, for example, families are increasingly moving beyond traditional grant-making to deploy capital, based on their values and impact goals, across a spectrum of business models to help solve societal problems. As such, many families take a portfolio approach to capital deployment – funding nonprofits with grants and low-interest loans, for example, or supporting local impact entrepreneurs with equity.

To facilitate this shift in mindset and stewardship, Terzich and Leppert enlist the resources of PNC Private Bank Hawthorn’s Philanthropy & Impact team, which helps ultra-high net worth families define their purpose and deliver on the impact they seek.

While the scope of purpose-driven advice once focused overwhelmingly on the “how,” the Philanthropy & Impact team works with families to first define their “why” and “what” before deciding which combination of vehicles is right for them. The team also manages the complexities of private foundation administration for ultra-high net worth families and the PNC Fund for Charitable Giving, PNC’s donor-advised fund.

What happens when a family is not ready to work together on a shared purpose? PNC Private Bank Hawthorn’s Institute for Family Success helps families navigate the complex practical and emotional aspects of managing and transferring wealth, with an emphasis on fostering healthy communication and family dynamics.

Throughout Leppert’s 20-year private banking career in North Carolina, he has found inspiration and motivation in the generosity of local families. “Helping families give to organizations and causes that are meaningful to them reminds me that I am helping manage more than assets and wealth,” he says. “I am helping families make the most of their purpose and create legacies that will continue far into the future.”



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