As an accountant and an advisor, you're sure to see a decline in the charitable giving of an appreciable percentage of your clientele. Don't be surprised to see clients heave a sad sigh when they admit that the donation they had planned to make to endow a chair at their alma mater is not going to happen during their lifetime, or even through their estate. How can you help them make that dream a reality?
I was at a meeting the other day for the Tiffany Circle of our local chapter of the American Red Cross. The Tiffany Circle is a donor club for women who give $10,000 annually to the Red Cross. There are about a dozen women in the Twin Cities Chapter. That means $120,000 a year for a specific project that they choose to support within the organization's structure: emergency vehicles, salaries for social workers, etc.
In essence, the Tiffany Circle is a giving circle. This is an idea that your clients might be familiar with on its flip side: an investment club. Members of investment clubs meet regularly to learn about various stocks and make collective decisions about investing in those companies. They share the profits and losses in proportion to the amount of capital they contribute to the purchasing pool.
Similarly, in a giving circle the members investigate various charities and vote on which causes they want to support. This way, their impact on the charity's mission is substantially greater than a single donation would be.
True, in the case of a giving circle, there is no financial payback (other than a charitable tax deduction). There are benefits, however. The Tiffany Circle, for instance, offers outstanding networking events, connected to learning about American Red Cross activities and programs that bring together ambitious women from across the country.
These giving circles, for women in particular, are nothing new. The Women's Divisions of Jewish Federations across the country have found them to be successful for decades. The United Way is trying hard to promote them.
Giving circles are not foundations. The money is meant to be used in the year in which it was put in the kitty. But the opportunities for creating a circle unique to your members are infinite. I was contacted recently by a group of women in Minneapolis who needed guidance in setting the ground rules for an independent-giving circle.
Another benefit that giving circles have over family foundations is that they need no legal or administrative structure beyond a checking or savings account into which members deposit their donations. Others may eschew a central account entirely, pledging their share at the beginning of the year, and then writing individual personal checks directly to that year's anointed charity.
Depositing $10,000 or less into a new family foundation will not give the results your clients want when it comes to philanthropy. Most community foundations will not accept $10,000 to start a donor-advised fund. But, as the Red Cross and many other charities recognize, the time to develop giving circles has arrived. Add it to your toolbox for your clients who want to continue to make a difference, even in these days of economic recession.
Doris Rubenstein is the founder of PDP Services (www.pdpservices.com), which provides planning and administrative services to new private family and corporate foundations. Reach her at (612) 861-7429.
(c) 2009 Accounting Today and SourceMedia, Inc. All Rights Reserved.
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