Baby-boomer retirees plan to give forward

Former Clinton U.S. Deputy Assistant Secretary gives his take on making a difference, and feeling good about it

giveWASHINGTON /PRNewswire/ — Oliver McGee, 2012-13 American Council on Education Fellow at UCLA, gives his take on baby-boomer philanthropy and charitable giving forward.
Giving forward has long been a charitable aspect of our socioeconomic life. Private philanthropy has fulfilled this human need for reaching forward into the next generation and the generation after that.

For instance, Phil Knight’s huge Oregon Health Sciences University grant recently shocked the philanthropy world by challenging charitable givers to “lean forward” towards eradicating cancer for future generations. And, Congress, for nearly a century, has granted favored tax treatments to charitable contributions by individuals (including baby-boomer retirees), the major source of charitable giving forward to philanthropic organizations.

Baby-boomer retirees plan to set new standards of diversity and participation in giving forward. Baby-boomer generational philanthropy and charitable giving is setting the standard for future generational giving forward. Baby-boomer retirees say, “I want to have an effect as a supporter.” Watergate’s impact on institutions during the baby-boomer era inspires a need for integrity and trust held by these donors in such well-endowed institutions, including churches, schools, colleges and universities and charities.

Inspired by inherited responsibility and accountability, resulting from baby-boomers giving forward, Generation-X givers declare “such well-endowed institutions are participating together in diverse ways of doing good stuff.” Generation-X givers want to make some impact giving forward chiefly in prevailing societal healthcare concerns of cancer research, oncology patient care, population-based clinical services, and high-end specialized holistic tertiary business care, including transplant, intensive-care and trauma services.

Contrast this going forward to “millennial generation” givers, who advocate “such well-endowed institutional diversity in giving forward is important right now. And, our multi-cultural, multi-ethnic world needs to fully participate in giving forward right away.”

Draw an additional distinction and look even further forward to “21st Tercentennial generation” givers. They participate, engage and trust such well-endowed institutions to “make a difference.” Cohorts of this highly shifted demography of givers have high expectations of a diverse institution working for future benefits of the next generation and the generation after that. These donors say, “Show Us,” and “Prove It, Now!”

Moreover, the 21st Tercentennial generation givers say, “We are looking way far out ahead in our giving forward.” This cohort of givers are even reaching as far out and beyond towards America’s Tercentennial – On Getting to 2076.

Altogether, humanitarian and moral benefits to baby-boomer donors and their private retirement philanthropic endeavors have been the central motivation and intent of baby-boomer giving forward planning. Tax benefits resulting from such good societal endeavors on the road to stakeholder value have also assumed increasing importance. This has become especially acute, as the complex needs of the country have substantially grown in scale and scope now and into the future.

Several giving forward planning options are available. Strategic options of minimizing income and capital gains tax burdens of families nowadays have become a critical aspect of family charitable giving forward planning. Such planning is ongoing, while baby-boomer retirees are considering their legitimate charitable beneficiary income and charitable donor capital gains tax consequences. These consequences jointly make a huge difference for the charitable organizations receiving the outright or deferred gift. This also maximizes baby-boomer retirees’ giving forward experiences realized, while at the same time, capitalizes on the philanthropic foresight exhibited by baby-boomer donors and their families.

Each baby-boomer retiree must ascertain if their charitable giving forward is best accomplished as an outright transfer or deferral gift during life, or postponed as a will or bequest upon death.

Several factors come to bear in a retiree’s giving forward planning, including the retiree’s present and anticipated future needs encompassing these three concerns: (1) donor’s income from income-producing assets, (2) possible financial needs and concerns of individual donor’s heirs, and (3) donor’s current and expected future income, leading to capital gains taxes, estate taxes, and unified transfer taxes.

Efficient tax and estate planning is needed for effectual giving forward. Estate and bequest gift taxes under unified transfer tax consequences are equally burdensome on baby boomer donors and their families. Tax consequences play an essential role in determining how best to pass one’s retirement nest eggs and estate assets to a donor’s successors, including maximizing gifts, both outright and deferred ones, to chosen charitable beneficiaries.

Potential baby-boomer retiree donors will, of course, review their strategic giving forward options with their own financial, tax, and estate planning advisors. This is especially required when deferral gifts involve charitable income or charitable remainder trusts, since state and municipal laws may be involved on remainder interests of giving forward planning. State and municipal taxes should be considered, even so, before undertaking a substantial charitable giving forward plan.

Numerous regulatory rulings and judicial decisions affecting charitable giving forward planning of baby-boomer retirees appear with unpredictable and uncertain occurrence. Special attention, nonetheless, must be paid to marital deductions on individual income taxes, capital gains taxes, and transfer taxes from charitable gifts, as well as, watching for possible considerations of minimum tax or the alternative minimum tax.

Since 1982, the maximum federal income tax benefit derived from a charitable gift by a baby-boomer donor is 50%, rather than 70%, as under prior law. For federal estate tax planning, the benefit has been progressively reduced from 70%, declining to 65% in 1982, 60% in 1983, 55% in 1984, 50% in 1985, and progressively lesser percentages thereafter.

Fortunately, the 1981 Tax Reforms made historic changes providing for unlimited transfers of property between spouses free of transfer taxes, affecting the charitable giving forward planning of married retirees, specifically involving gifts through testamentary bequests.

America is a generous nation. Remarkably, Americans are an extraordinarily generous people. Most of all, our generosity is not necessarily just tied to tax benefits of giving forward.

Alexis de Tocqueville in “Democracy in America” records the American citizenry gives forward “without reference to any bureaucracy, or any official agency.”

Inside the most recent “Giving USA”, Americans are indeed extremely generous in giving forward to charities and philanthropic organizations at nearly $300 billion dollars as of 2012-13. This is equivalent to the net income of about 20% of all corporations of the Fortune 500 today.

To achieve this exceptional $300 billion-dollar amount of charitable generosity experienced by our citizenry (including baby-boomer retirees, and the largest emerging millennial generation — which is about an 8% larger cohort than the baby-boomers), America invested an equivalency of nearly $4 trillion dollars in assets, sold about $6 trillion dollars in goods and services, and drew upon the combined productivity of more than 40 million employed workers.

That’s a lot of goodwill for all charitable Americans to feel good about giving forward, for sure!

About Partnership Possibilities for America

Founded by Oliver McGee in 2010, the mission of Partnership Possibilities of America is to provide focused expertise and leadership by fostering greater public awareness, appreciation, advocacy, and advancement of social, technological, educational, economic, and political (STEEP) capacity of philanthropy working across government, university, and industry partnerships.


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