Giving 'Til It Hurts - and Then Some
Friday's Wall Street Journal published a fascinating article about what those in the philanthropic world call "stretch" donors - folks who make charitable gifts and bequests that are beyond what would be expected given the donor's financial circumstances. Such donors choose to forego purchasing vacation homes or funding their own retirements or children's education funds in favor of making substantial philanthropic gifts. It appears, according to the Journal article, that the incidence of such "stretch" gifts is increasing, and the average age of the donors is moving lower. My initial reaction upon reading the story - especially the part about the Mississippi neurosurgeon who decided to give away 99% of his net worth, and now faces uncertainty with regard to his own retirement, as well as his 3 year old's college education - was that, in most cases, these folks were terribly irresponsible for putting their own "feel good" philanthropic notions ahead of their own familes' security. As I continued to think about it, though, I realized that, as with so very many things in life, its not as simple as all that, and first reactions can be wrong.
I strongly believe that one of the primary purposes, if not THE primary purpose, of estate and family wealth planning, is to help the client realize his or her her hopes and dreams, to fulfill their vision for their and their family's future and legacy. For the folks profiled in the Journal article, these "stretch" philanthropic gifts would seem to meet those criteria. The donors about whom the Journal wrote clearly had defined values that they wished to imaprt to the next generation, and saw these gifts as a part of their legacy. Their dream was to use the wealth they had built to leave a legacy from which a wider public could benefit. This is not at all an illegitimate goal. To the contrary, I believe that chartitable and philanthropic bequests should be discussed as a part of any estate plan. Even where the charitable gifts amount to most, or all, of the donors net worth, there is nothing irresponsible about such a distribution scheme, so long as the donor has been properly counseled and has fully considered the ramifications of the plan. As noted, planning is, in my view, about transmitting our values and leaving a legacy. These folks appear to have done a pretty good job at that.
