Dear Friend of the East Bay Community Foundation,
This issue of Giving Advice debuts our impact investing program, highlights potential reductions in tax breaks for charitable contributions, and provides guidelines on how to deal with the tough situation of a dying client as well as a client thinking about death.
You will also find invitations to two events of potential interest: one on estate planning for "blended" families and one on strengthening non-profit organizations for those of you serving on a non-profit governing board. We hope to see you there.
Kindest regards,
Nicole Taylor
President & CEO
East Bay Community Foundation's New Impact Investing
I'm pleased to announce our new "impact investing" initiative that puts a portion of our investments to work simultaneously generating financial returns and making a positive impact on local communities.
As you know, "impact investing" places capital where it can generate financial returns, while also achieving social or environmental goals. This kind of investing has grown quickly in the past five-or-so years, with a 2009 report by the consulting and think-tank Monitor Group estimating the industry could increase from $50 billion in assets to $500 billion in the next ten years.
We sought input on impacting investing from our investment managers -- Convergent Wealth Advisors-- and from our fund holders and other foundations having knowledge and interest. After reviewing that input and after analyzing options available to us, our financial staff and the Investment Committee of our Board of Directors have chosen to work with Community Capital Management, Inc.
Community Capital Management is a privately held registered investment advisor. Its primary goal is to invest in government-related subsectors of the bond market that produce above-average, risk-adjusted returns, while providing added diversification and generating a positive impact on the community and the environment.
Consequently, we have placed more than $3 million from our fixed-income allocation in the intermediate and long-term investment pools - less than five percent of the total assets in both pools -- into a mutual fund at Community Capital Management called "CRA Qualified Investment Fund Institutional Shares (CRANX)."
The fund invests in U.S. Agency Mortgage-Backed Securities (single-family and multi-family), taxable municipal bonds, and Small Business Administration loans that finance home loans to low- and moderate-income families, loans to small businesses, affordable rental housing, and community development initiatives. Our investment in the Fund finances community development in our service area of Alameda and Contra Costa counties - specifically, to date, in Concord, Antioch, Walnut Creek, Lafayette, El Cerrito, Oakland, Alameda, San Leandro, Hayward and Fremont.
In today's world of tight credit, these efforts provide opportunities to own homes and develop small businesses for those who might not otherwise have them.
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Tax Changes Affect Charitable Giving?
According to a recent article in The Chronicle of Philanthropy, the Obama Administration is attempting to limit charitable tax breaks for the wealthy in order to help reduce the federal deficit.
"The proposal has triggered anew questions about whether such tax changes hinder giving," said the article, which went on to describe the President's plan "for limiting itemized tax deductions, including those for charitable contributions to 28 percent for taxpayers in the highest brackets. Currently that rate is set at a maximum of 35 percent."
While a number of wealthy philanthropists say they give for reasons other than tax deductions, many in the philanthropic sector believe reducing tax breaks will also reduce giving by the wealthy. The 2010 Bank of America Merrill Lynch Study of High Net Worth Philanthropy indicates wealthy households are actually becoming more sensitive to the effect of tax policy on their giving.
The study reported "about two thirds (67 percent) of wealthy households would somewhat or dramatically decrease their charitable contributions if they received zero income tax deductions for their donations; 47 percent responded this way in 2007."
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When Your Client Says, "I'm Dying."
Medical professionals are trained and accustomed to dealing with the dying. Professional advisors, not so much.
So what to do when your client announces she or he is dying? How do you deal with this emotional situation and serve your client's best interest? You can't serve others if you're not clear and straight with yourself. So, first, accept your inner feelings of discomfort.
Experts say the first thing to do after expressing sympathy in a personal and heartfelt manner (it's ok if you get emotional) is to avoid giving the client advice about how to feel and how to think about death. That's not what your client wants or needs from you. And don't send flowers.
But do listen, carefully and at length. And do ask questions, if you need to, in order to surface your client's financial concerns. Do communicate to your client that resolving those concerns - with your help, if the client wants it -- may bring some psychological comfort.
There are a number of financial issues that might require your advice:
- How long to keep working and how the client wants to spend the final months;
- What impacts the process may have on the client's estate;
- To what extent money will be spent on different forms of medical treatment;
- Impacts on an existing life insurance policy;
- Spending assets or making gifts to reduce estate taxes;
- "Giving Back" and leaving a charitable legacy;
- Timing for important actions and financial decisions;
- Preferred funeral or final arrangements; and
- Working with survivors.
(With thanks to "Unique Challenges Financial Planners Face when Advising Dying Clients," by Dr. David Edward Marcinko, MBA. CMP, and to "By the Way, I Have Cancer: Working with Clients after their Diagnosis," by Libby Palomeque, CFP, Certified Grief Recovery Specialist, First Republic Investment Management.)
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When Your Client Isn't Dying...Yet
At a certain point in time, even the "healthy wealthy" consider what should happen to their assets when they're gone.
According to a recent study by U.S. Trust, a subsidiary of Bank of America, less than half of polled parents with more than $3 million in assets say it's important to leave money to their children. The survey indicates they prefer instead to use that money for travel and other purposes. Their worries: The kids will become lazy, make dumb decisions, or blow the money.
During this same period, meanwhile, according to an article in Forbes magazine, wealthy parents often want to engage their families in philanthropy - as a way to prepare the next generation for the responsibilities of wealth. Indeed, philanthropy is a wonderful way for families to share their history, values and passion for helping others.
The East Bay Community Foundation can provide resources to help your clients approach charitable giving in a way that is impactful. By involving several generations in philanthropic activity, parents can not only cultivate a long-term commitment on giving back, but also have the opportunity to learn from and grow with each other. We have the tools to help choose the right charitable vehicles and to have inter-generational conversations about philanthropy.
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For Non-Profit Board Members: Strengthening Organizations
If you serve on the board of a non-profit organization, then you'll want to know about the May 18 panel discussion on "Strengthening Leaders & Organizations," designed especially for board members, chief executives and senior staff members of non-profit organizations.
Three experts from CompassPoint, LeaderSpring, and the Rockwood Leadership Institute will discuss how non-profit organizations can create sustainable programs, perform financial forecasting, manage their organizations, ensure staff members increase their skills, assess the strengths of their governing board, and find appropriate board members.
The event, which we are co-sponsoring with the Clorox Company Foundation, will be held 9:30 am to noon in our conference center at 353 Frank Ogawa Plaza in Oakland. To register, contact Debrah Giles by May 13 at 510.208.0804 or at dgiles@eastbaycf.org
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Estate Planning For "Blended" Families
Mark your calendar, because on Tuesday, June 14 we'll once again co-sponsor with Fitzgerald Abbott & Beardsley LLP (FAB), our popular seminar for professional advisors on the difficult issues that can arise working with surviving children, stepchildren, and spouses.
The session, led by FAB partners Kristin Pace and Susan von Herrmann, will deal with topics such as drafting trust provisions, choosing and removing a trustee, trustee discretion, treatment of separate and community property, equalizing gifts to children, and consideration of potential inheritance from others.
Held at our conference center at 353 Frank H. Ogawa Plaza in Oakland, the event consists of registration from 3:30 to 4:00 pm, seminar from 4:00 to 5:30 pm and a reception from 5:30 to 6:30 pm.
To register, contact Giles Miller at gmiller@eastbaycf.org or at 510.808.1720
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Conference Center with a Conscience
Looking for a venue for that special meeting or conference? Don't miss the James Irvine Foundation Conference Center at the East Bay Community Foundation.
Non-profit, business, and governmental organizations alike have found our facility to be ideal for groups ranging from six to 120 people. Since our conference center isn't part of a big hotel, you avoid big crowds, noise and other distractions.
Our conference center is in downtown Oakland next to City Hall, only a block from BART and close to major freeways and hotels. And all proceeds from the center support the work of the East Bay Community Foundation. When you book a meeting with us, you're giving back to the community.
For more information click here or email Chanda Eddens at ceddens@eastbaycf.org.
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You Can Help: Economic Opportunity And Education Leading To It
As you know, we're here to help you with your clients in need of philanthropic advice and services.
We're also one of the largest funders of causes and needs here in the East Bay. Our focus is on advancing economic opportunity and the education that leads to it. And we can do it only with your support.
We help young children with the fundamentals of learning - reading and math - so they are successful in the education system and so they have better economic opportunity when they grow up. We help adults and families develop job skills, get jobs, start or improve their own small businesses, and acquire economic assets, such as their first home.
You can make an unrestricted contribution to the East Bay Community Foundation that will help us do what we do best: conducting the research that identifies pressing needs; funding non profit organizations that provide effective solutions; and leveraging support through partnerships and co-investments with business, government, private foundations, and individual donors like you. You can make a donation today by going to our website at www.eastbaycf.org and clicking on Donate Now.
With your support, you join us in the power of many: We leverage capital from many sources. We provide leadership, bringing many players with resources and solutions to the same table. We provide expertise through research and knowledge of organizations and of programs that get results. |
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