Author Archives: Stewardship Foundation

Donor Advised Funds and why Private Foundations need them

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A donor-advised fund (DAF) is a separately identified fund or account that is maintained, operated, and legally controlled by a section 501(c)(3) organization like The Stewardship Foundation. In this month’s article, we list why owners of private foundations may want to covert to DAFs with The Stewardship Foundation.

Man working in home officeReason #1. Save time and money

Private foundation owners pay for lawyers, accountants, and office supplies, but with a DAF, owners advise how the funds are used, yet avoid the administrative cost. In some cases, as much as 50%. Cutting costs makes the money go further.

Reason #2. Less hassle

DAFs relieve philanthropists of the hassles of running a foundation. No more tedious paperwork or fact checking potential recipients. For larger foundations, no hiring, firing, or worrying about staff.

Reason #3. More privacy

DAF funds are relatively anonymous because there are no requirements to disclose as much information about their charitable giving. Privacy ensures that philanthropists can support causes that operate within their personal value system, ethical standards, or call to Christian conscience. Private foundation tax forms are public information, exposing operational details and even personal information.

Reason #4. Smaller donor investment fees

Small foundations often pay relatively high fees to the firms that handle their investments. On the other hand, donor funds work with a much bigger pool of money from all the accounts we administer, so fees are lower.

Reason #5. More generous tax deductions

Donors get an immediate tax deduction when they contribute to a fund from their private foundation, but with a DAF, deductions are more generous – instead of a limit of 30% to a private foundation, donors can deduct cash contributions up to half their adjusted gross income each year. There are other tax advantages for appreciated-security donations, and investment gains are generally tax-free (no excise tax).

Reason #6. Protected legacy

DAF funds protect the original intent of the founder. After a founder’s death, family members may disagree on the direction that the private/family foundation should take. They may begin to direct funds to causes contrary to the founder’s moral or ethical values. To protect the legacy intent of the founder, the foundation’s assets can be split among several accounts at donor-advised funds, and those accounts can then be used for different purposes.

If you are interested to learn more about converting from a private/family foundation to donor advised funds, we recommend a recent Wall Street Journal article by Jillian Mincer where she raises the question whether it is time for private foundation owners to convert to donor advised funds.

Leaving a Legacy When Morality and Coolness Collide

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millennialsWe often hear from parents and grandparents about a disconnect between their values and those of their children and grandchildren. For example, many grandparents do not share their grandchildren’s views on life issues, same sex marriage, and morality in general.  Another area of disagreement between the generations revolves around the church. Brett McCracken, author of Hipster Christianity: When Church & Cool Collide, addresses the issue in a recent article published in The Washington Post, How to keep Millennials in the church? Let’s keep the church un-cool.

McCracken, a Millennial himself, sides with the older generation and takes his own generation to task for wanting the church to adapt to their whims. Near the end of his article he surmises…

But at the end of the day, the Christian gospel is defined outside of and with little regard to whatever itch people think Christianity should scratch. Consumerism asserts that people want what they want and get what they want, for a price. It’s all about me. But to position the gospel within this consumerist, give-them-what-they-want framework is to open the door to all sorts of distortions, mutations, and “to each his own” cockamamy variations. If Christianity aims to sell a message that scratches a pluralism of itches, how in the world will a cohesive, orthodox, unified gospel survive?

Brett McCracken understands how importance it is for the Church to remain steadfast in its values and principles. Do your grandchildren and children “get it” too? If you do not believe your children or grandchildren hold McCracken’s point of view regarding the church, or they do not share your values and morality, then you must decide how to protect your legacy.

The Stewardship Foundation can help you protect your family legacy and ensure that your values are honored in your estate planning and the administration of your family or private foundation. We are here to assist you through the various financial options we provide. Our core principles will not change. The Stewardship Foundation does not seek to “scratch a pluralism of itches.” Rather, we support a “cohesive, orthodox, unified gospel” and we work with those individuals, families, organizations, and professionals who support them as well.

Proverbs 22:6: “Train up a child in the way he should go, and when he is old he will not depart from it.”

Mickelson Wins – Loses Over Half to Taxes

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st. andrewsIn July, Phil Mickelson won the British Open, and before that the Scottish Open. I hope you enjoyed his performances as much as I did. If you’re not a golf fan, there’s a story here that you still might find interesting.

After winning these prestigious trophies, Mickelson lightened his trip home from the lovely British Isles by forking over 44% of his winnings to the United Kingdom. Back in the U.S., the IRS took their share of self-employment tax and Medicare surtax, and his home state of California took another 13% or so leaving our golf hero with about 39% of his winnings. And that’s before he paid his travel expenses, agent fees and his caddie, leaving him with a meager 30% of earnings.

Forbes ranks Mickelson as the 7th highest paid athlete in the world. Last January, Phil was so mad about taxes he admitted he was going to make some “drastic changes” because he was in the “zone” that was being targeted both federally and by the state.

No one whom I know personally has a net worth of $180 million, but I do know most of us would do well to take a look at our own rising tax burden and think about making some changes. A couple of places to start are to

  1. review our investment strategy for these changing times, and
  2. consider how we can lower our estate tax risk (and do some good for a deserving charity in the process).

The Stewardship Foundation is always willing to help you assess your situation, examine your goals, and help you meet your financial needs. Unfortunately, we can’t help you read greens or improve your golf swing, but we can help you drive your passions and approach achieving your dreams, resulting in the financial birdie or even the eagle you desire. Give us a call. If you prefer to have a chat after the 18th hole, we’re open to that too.