PHILANTHROPY OR CHARITY

A COMPLETE ESTATE PLAN INCLUDES SEVERAL DOCUMENTS:

Charity

Charity is the voluntary giving of help, typically money, to those that are suffering or in need. It tends to address an immediate problem and is a compassionate response to a natural disaster, or a token of support for the victim of crime or violence, for example. Charity can also address immediate needs for food, shelter or medical care. It is a short term response, although one may give frequently to a particular cause.

Philanthropy

Philanthropy is more strategic in that it seeks to root out causes of the problem and to develop long term solutions. Striving for long term solutions to problems such as addiction, housing shortages, or hunger takes time, study, and planning. This is where charity comes in, providing direct relief for people in immediate need.

Both charity and philanthropy possess the same goals of addressing needs and making the world a better place but with different approaches. One deals with direct relief and the other with root causes and finding solutions.

Is one better than the other? Of course not! They are just two different ways of solving problems and both are essential to the functioning of a decent society.

Recently, there have been changes to the tax code regarding charitable giving.

Three Acts have been passed recently - The Tax Cuts and Jobs Act of 2017 (TCJA), the Setting Every Community Up for Retirement Enhancement Act (SECURE) and the Corona Virus Aid, Relief and Economic Security Act (CARES). All have some impact on deductibility of charitable contributions. They also may offer some additional advantages. For example, a qualified charity may receive your IRA with no tax consequences since charities do not pay taxes. Appreciated assets are also beneficial as a gift to a charity, as capital gains tax can be avoided.

Another way to contribute is through a community foundation, which is a grant making public charity that is dedicated to improving lives in a particular community. Individuals, families, businesses and non-profit groups establish funds within the foundation in which they can contribute assets for charitable purposes. The foundation manages the assets and takes suggestions from those that set up the fund on how and where to distribute the resources. There are over 700 community foundations in the United States.

Whether one chooses charity or philanthropy, the ultimate goal is to help the community by using personal skills and resources to make a difference.