Professional advisors who work with donors of Communities Foundation of Texas are coping with turbulent financial times.
Clients have seen their portfolios battered as the stock market continues its daily roller-coaster ride. They are dealing with not only the reality of the market downturn, but the psychol- ogy of the decline as well. In addition, charitable organizations are facing increasingly challenging times as needs in the community continue to be great.
With year end approaching, a time when people traditionally make decisions about gifts to charity, the financial climate poses a dilemma. "Clients still want to give, but current market conditions are causing them to take a step back and evaluate their plans," said Gregory C. Glosser, senior vice president with the Dallas office of RBC Wealth Management.
"These conditions are the mirror opposite of the late ‘90s when the technology bubble afforded many people the opportunity to gift appreciated stock," he said. "Today it is more difficult to give in traditional ways, such as gifting appreciated non-cash assets." While the market continues to experience turbulence, CFT can assist individuals in making year-end gifts that can provide for philanthropic needs in the community.
Clients are showing an interest in giving strategically, said Kathy Muldoon, senior vice president, Carter Financial Management. "Clients are very mindful of the downturn in the market. They are thinking hard about those charitable organizations impacted by the economy, and many are willing to bridge a difficult time for charities by accelerating gifts."
Mr. Glosser agrees and sees the market downturn as an opportunity. "It’s harder to give during a decline, but giving at this time can be more impactful to the charitable organizations and to an individual. You can ask yourself, ‘Am I giving out of excess or am I giving from the heart?’
"The market’s performance has not affected his own family’s philanthropy, Mr. Glosser said. "We will continue to give despite the volatility. I would suggest that overall giving should continue through all markets, with some modification. A well-thought-out charitable giving plan is one that can be implemented in up and down markets." Over decades of market cycles, this has proved to be true.
Mr. Glosser said his family has become more thoughtful and structured in their charitable giving since 2000, when they established a donor-advised fund at CFT. They wrote a philanthropic plan and each year make grant recommendations to fund charities that fit the passions and causes in their plan. "CFT helped us narrow our focus and become more effective givers," he said. "They’ve made it so easy and cost-effective from an administrative point of view, especially with the ability to make grant recommendations online."
As you reflect on the year and make plans for charitable giving, we understand the inclination to be cautious and selective. Nonetheless, it might be an ideal time to gift some long-term securities as you review your investment portfolio. One option to consider is securities that you have held long-term that may have dropped in value, but still have appreciation with tax consequences. If you are holding securities that have depreciated in value, it may be best to sell them, write off the loss and establish or add to a fund with the proceeds.
Another option is to take advantage of the extended IRA rollover provision that allows individuals 70-1/2 or older to make a charitable rollover up to $100,000 directly from an IRA. Qualifying charities include any field of interest, designated or scholarship fund at CFT.
To learn more about how CFT can help you achieve your philanthropic year-end goals, please call Dwight Clasby, Jackie Franey or Debra Phares at 214-750-4226.