Insights // Winter 2022 10
HBK Nonprofit Solutions
Outside the Lines In each issue of Insights, we feature an HBK service line leader who will provide practical information and thought-provoking tips and ideas about their financial discipline.
Endowments: A Powerful Solution for Both Donors and Charitable Organizations By Ryan Hawk, CFP®, CTFA HBKS WEALTH ADVISORS SENIOR FINANCIAL ADVISOR
A
s the year draws to a close, many of our client conversations are about gifts—not so much about Christmas presents, but gifting to charities and other philanthropic organizations. The subject arises as we discuss year-end deadlines and planning. Considering the strong stock market performance of 2021, most of my clients are dealing with capital gains and how to plan around them, which is where gift-giving conversations begin. Donating is one of the few options to decrease your tax responsibilities. Giving money to a charity also corresponds nicely with the season and the spirit of doing good for
others. However, when I ask customers about their favorite organizations and programs to support, I discover that many of them have reservations. They are concerned about how some charities use their donations, particularly put off by the seven-figure salaries of some nonprofit organization executives. My interactions with my nonprofit foundation and charity clients, on the other hand, frequently revolve around annual receipts that fall short of income predictions and strategies to increase their donation receivables. This is where taxpayers looking for deductions and nonprofits looking for donations can come together for their mutual benefit. An
endowment can be the solution to both concerns.
The endowment double solution For the donor, an endowment can perpetuate their gift by producing gifts for many years. In addition, an endowment can provide assurance the donated funds are used for programs they specify. For example, a donor might endow a certain position within an organization, like a chaplain in an assisted living facility who helped the donor’s mother adjust to her new way of life. Or an endowment could be used to fund educational scholarships for the donor’s field of study that allowed him to earn money during his career
