What The Wealth

Balancing Generosity and Financial Security: A Journey to Sustainable Philanthropy (92)

• Jonathan Bednar II, CFP • Episode 92

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Imagine navigating the delicate balance between nurturing a generous heart and managing newfound wealth. That's exactly the journey we embarked on with a client who, after receiving a significant inheritance, grappled with how much they could give to their community without risking financial security. As a dedicated Financial Planner, I'm thrilled to share the story of this client's inspiring path towards sustainable philanthropy. Through their eyes, we explore not only the joy of giving but also the strategic planning that allows for impactful, community-focused donations.

This episode of What the Wealth podcast is an illuminating session on integrating charitable giving with financial stability. We unravel the practical methods employed to maximize our client's desire to contribute, ensuring their generosity doesn't compromise their own fiscal health. It's a narrative filled with heart and numbers, showcasing the profound satisfaction that comes from meaningful giving. Join us as we reveal the steps to creating a giving plan that aligns with personal values and the sheer happiness that blossoms from supporting others.

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Thanks for Listening!

Jonathan

Speaker 1:

Hi, welcome back to the what the Wealth podcast. I'm Jonathan Bedner, certified Financial Planner. Today I want to talk a little bit about giving and having that givers mindset, that philanthropic kind of heart, and how that can impact your lives and others and how we plan for that through a financial planning lens. A couple years ago I had a client and this came up recently because we did an annual review of them but a couple years ago this client had an unexpected inheritance come, pretty significant, about one and a half million dollars, and from that time we've been navigating lots of financial planning issues, but one that's always been on their heart is giving. And how do we? How do we give? This has been a core value of theirs from the very beginning, kind of ingrained in their life is to give and to help others. And so now that they have this inheritance, the big question was Jonathan, how much can I give? You see, in the past, and really still to this point, they've given a hundred dollars here, fifty dollars there, two hundred dollars somewhere else, and while they feel like they're doing their part, they're helping, they're giving, they feel like they should be doing more, especially with this inheritance that they received a couple years ago. So and this is on top of their tithing they tithe 10% to their church, but they're just called to do and really feel they find pleasure and enjoyment out of being able to help others who can't help them. So I know the Boys and Girls Club is a place that they like to help. They like to help people with their charge. I mean, they just want to be able to be that foundation to people.

Speaker 1:

And so when we were doing our annual review last week, they said you know, basically this exact scenario, jonathan. We've been helping people. We've been, you know, giving a hundred dollars here and fifty dollars there. And you know, every week when we get groceries, we buy some groceries and put in the food pantry section, you know, to give to people that are hungry. And so we help, but we feel like we could do more. There's more and we're called to do more, and I'm just not happy. However, I'm not sure how much we should do. I don't know how much we should give. So, as we impact that, I said, mr and Ms, client, you give what you're called to give. What's laid on your heart to give is what you give.

Speaker 1:

And they understood that concept, but for them, they wanted a number that they could give without putting them at financial jeopardy, and they just they didn't know how to come up with that, and so what we did is some real simple back of the napkin math. They inherited one and a half million dollars. That money's all after-tech, so it's non-retirement money. They get to it very easily. If they sell something, it will be a capital gain.

Speaker 1:

But there's ways around this. We could make a contribution to a donor advice fund, which would be a non-taxable event to them. There's several ways we can make these charitable contributions, but again, their impact really wants to be centered around their local community, and so a big donor advice fund contribution that's gonna go to a very well-known charity is fine and good, but that doesn't hit their community the way they would like to, and so what I suggested was let's just take pen and paper or pen to paper and let's do some math On this one and a half million dollar account. If we take 2%, we're gonna clip 2% in dividends off of this, and while dividends aren't guaranteed, we've got a pretty good track record of companies that are paying these dividends and we feel good about their likelihood that they'll continue to pay. But again, if one doesn't pay or one cuts or whatever, it's not gonna be in the world. So we ran this 2% number. We multiplied the 2% by the one and a half million dollars and that tells us that we can spend $30,000 a year pretty comfortably giving and helping others in their community.

Speaker 1:

So instead of giving them a $50 tip or buying someone $100 of groceries, they can make some bigger, impactful gifts now. They could buy someone who really needs a car, a $10,000 car. They can help someone who's struggling to pay for school, some tuition. They can help a single mom with three months worth of her rent or three months worth of mortgage payments. We can make some pretty sizable gifts when we can put some pen to paper down and really think about what do we want to do, what do we feel like we're called to do, and how can we fit this into our financial plan without derailing our long-term retirement.

Speaker 1:

These clients are still working, so there's still some questions around. What do we need to do, kind of for this last mile from now until the next five or six years, until they actually choose to retire? But we want to go ahead and start making these charitable gifts now, and so it's really easy just to sit down and have an open, honest conversation with each other. I can guide and make recommendations, but I got to have some feedback on. You know, really, what are you trying to accomplish?

Speaker 1:

We have hundreds of clients that we serve, and while there's some similarities interwoven between each client or their households, every story is actually different, and so what might be good for one client might not necessarily resonate totally with another client, and so taking some of these strategies and implementing them gives this client the confidence that we're still on track to retire. You know that's not going to derail our long-term vision or a long-term plan. We're still going to have money for retirement. We're still going to be able to help kids and grandkids in the future. We're going to be able to do the things we want to do, but we're also going to be able to impact positively the lives of others in our community today. And so it's really really incredible, it's really really humbling to be part of these conversations with people who realize that you know they probably have enough and you know, not knowing what the future holds, taking a little risk and investing back in the people in their community. And so you've got someone that spends I have no idea how much they spend probably $1,000 a year, you know in random $1,500 placements. And now they're going to be able to make a really huge impact on people around them. And it's contagious, you know. It makes you appreciate their hearts and their souls and them as human beings, because their drive and their passion is to be the rock and the foundation for others who may not have that. So really humbling, really encouraging to see and just another example of the ways that we help people do and implement financial planning in their lives so that they can, you know, make those decisions and make them with confidence. So that's all for this podcast.

Speaker 1:

Thank you for tuning in. Thanks for listening. Have a wonderful day, confident in your time. Thanks for joining me on another episode of what the Wealth. If you enjoyed the episode today, smash that subscribe button. It helps me more than you think. Also, if you found this episode insightful and a light bulb went off, share it your friend, aunt Judy, the random guy in the office who's always talking about investments. Wealth isn't about just the chuching. It's about our choices, chances and changing our financial futures. The information in this podcast is informational and general and nature and does not take into consideration the listener's personal circumstances. This podcast does not intend to be substituted for specific and financial, legal or tax advice. You should consult the approved qualified professional prior to making a final decision. Securities offered through LPL Financial member FINRA. Sipc. Paradigm wealth partners is the other business name for Independent Advisor Alliance. Investment advice offered through Independent Advisor Alliance, a registered investment advisor. Independent Advisor Alliance and Paradigm wealth partners are separate and days for LPL Financial.