High-Net-Worth Family’s Guide to Philanthropy

Written by Bloom Investment Counsel, Inc. on December 12, 2022. Posted in Philanthropy.

Philanthropy comes from the Greek word philanthropia, meaning “love or kindness to mankind.”

Many High-Net-Worth (HNW) families have a genuine desire to help humanity and promote the welfare of others. Through philanthropic planning as part of their overall family financial plan, HNW Families can be more effective in their charitable giving as well as provide a lasting family legacy.

Philanthropic Perspectives

Individual giving by people from all socio-economic backgrounds is increasing globally, and it is now greater than institutional giving in most countries. In the U.S., charitable giving totaled an estimated $485 billion in 2021 of which about $327 billion was donated by individuals.

Andrew Carnegie, one of the early U.S. and British philanthropists followed the credo “the man who dies thus rich dies disgraced.” This credo is now a growing trend as we see more and more HNW families allocating larger proportions of their assets to philanthropic causes.

How is Philanthropy Different from Charitable Giving?

For many individuals and families, charitable giving is usually in the form of annual donations to a charity they feel strongly about or an organization that has helped a family member.

Philanthropy, on the other hand, is a more strategic approach to charitable giving. It involves establishing a long-term plan for giving, which includes setting and committing to the family’s charitable goals and purpose, and then putting that plan into action.

If philanthropy is your family’s goal, then philanthropic planning should become an important component of your overall financial plan, including multi-generational wealth transfer.

Key Components of Philanthropic Planning

Strengthening Family Values and Legacy Planning: Giving should be tailored to your unique circumstances. HNW Families have the opportunity to express their values and charitable objectives in a well thought out philanthropic plan.

Understanding the Benefits of “Planned Giving”: Planned giving is a component of your overall comprehensive financial plan. In maximizing your giving potential and the benefits to your financial plan, it will impact your estate planning, tax planning, insurance planning and legacy goals – now and potentially for future generations.

Constructing Your Philanthropic Plan: It is important to consider your level of involvement with specific charities you wish to support. This will be driven by your family’s existing involvement with specific organizations and your family’s moral and societal beliefs. Thinking about these elements will help you build a framework that will encourage active participation of family members.

Your philanthropic plan is a component of your overall comprehensive financial plan. It is crucial to involve all the necessary financial experts to ensure all components of your plan are optimal and cohesive.

Maximizing Potential Tax Benefits: By constructing an optimal philanthropic plan as part of your financial plan you have the opportunity to optimize your tax savings in relation to your planned giving.

Depending on your chosen structure, you may be able to realize significant tax savings in addition to maximizing your charitable giving. Working with respective financial professionals will be key to achieving this result.

Including all the Elements of an Effective Framework: You should focus initially on strategic development, but you need to ensure that regulatory compliance issues are covered, infrastructure needs are specified, implementation steps are laid out, and monitoring and evaluation processes are in place. These are all parts of an effective framework for focused and impactful philanthropy.

Heading Towards Your Philanthropic Plan

The process of adding philanthropic planning to your overall family financial plan may feel overwhelming at first. There are many resources available and even philanthropic specialists you can reach out to for help, to get off to the right start.

Bloom Investment Counsel, Inc. Can Be a Part of Your Philanthropic Journey

Established in 1985, Bloom Investment Counsel Inc. is a Toronto-based independent investment management firm that specializes in creating and actively managing diversified customized portfolio of Canadian and U.S. dividend-paying stocks for high-net-worth individuals and families, family offices, foundations, corporations, institutions and trusts.

Our customized dividend-paying investment portfolios can help you generate an additional stream of income for philanthropic purposes, if desired, while continuing to preserve and build wealth.

Visit our website at www.bloominvestmentcounsel.com/investmentmanagement to learn more about our personalized dividend-paying portfolio services.

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This content is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this content should consult with his or her financial partner or advisor.