Giving Back vs. Leaving a Legacy

Doris Rubenstein is the Principal Consultant of PDP Services, based in Minneapolis, and has over three decades of experience in the field of philanthropy.  Her book, The Good Corporate Citizen: A Practical Guide (John Wiley & Sons, 2004), is a landmark work in addressing the complexities of planning and administration of charitable giving and volunteer programs for business.   She is a member of the Philanthropic Advisors Network and pays dues to the National Committee on Planned Giving (NCPG) which provides both educational programming and ethical standards for those who work in this field. “Those who belong to the NCPG know that one of their major themes is “Leave a Legacy,” she says. “The idea is that those who make bequests and other deferred gifts can make a long-term impact not only on the beneficiary organization, but on their descendents as well. This legacy is supposed to be a point of both pride and unity for their family.”             She said it was surprising then to read a report conducted by the Indiana University Center on Philanthropy for the Bank of America, Bank of America High-Net-Worth Philanthropy Study,which seemsto refute the whole legacy concept that NCPG has been promoting for nearly two decades: For 86.3 percent of respondents, “giving back” is more important than “leaving a legacy.” In fact, only 26.1 percent of respondents cited “leaving a legacy” as a motivator for their philanthropy.             Rubenstein points out that there is only a very small group of mega-wealthy individuals who inherited their money. “Much of their wealth is measured in what they control through past legacies deposited in family foundations.  Members of the Rockefeller and Ford families are still intimately involved in the policies of the foundations that bear their names.”             In effect, she notes, the majority of high-net-worth persons are self-made. “They worked hard to make their money, and they appreciate the institutions that helped them along the way. Indeed, the report shows that entrepreneurs are the most generous donors.”    She feels that as an accountant, the principal concern for the client is taxes. But, are taxes the principal concern of the client when deciding to make a major gift?    She says that many in the nonprofit sector have been deeply concerned about the impact of the proposed estate-tax repeal on giving. “Evidently, high-net worth donors do not share this concern since 56.1 percent responded that their giving would remain the same regardless of the existence or non-existence of an estate tax. Even the deductibility of charitable gifts is not a major factor in the mind of 51.7 percent of these wealthy donors.”   She adds that two factors seem to make the difference in the decision of high-net-worth individuals to make big donations: Being asked, and their emotional connection to the charity.   However, the survey showed an amazing correlation between the person’s volunteer hours and the dollars they donated to the same charity: $620 dollars were donated per hour for those volunteering up to 50 hours per year; the figure jumps to $927 at 100 hours of volunteer time. Still, it’s readily admitted that volunteering is the best way to make that emotional connection by developing an experience of trust, admiration, and respect for the organization itself. It allows the individual to see the inner operations and feel the spirit of the organization.    Rubenstein believes that all of this still does not deny the reality that some wealthy persons do want to leave a legacy of some sort. “This was cited as a motivator by those 26.1 percent of the Bank of America study. The forms a legacy can take are still numerous: The family name on a summer camp cabin, an endowed scholarship fund at their alma mater, a family foundation that will continue to reflect long-held values.”   So, we come down to the question of how and why the accountant’s high-net-worth clients give to charities? Do they compare to the profile drawn in the Bank of America report? Remember, very few of their giving decisions are made on the basis of their tax deductibility. As Rubenstein points out, “It’s your job to remind them of this part of their finances, but the decision is ultimately in their hands.”