Ingram's December 2022

Q&A ... W ith J oseph G rowney A partner in Lathrop GPM’s estate-planning practice addresses questions top of mind for an emerging philanthropic class, as well as and long-time donors. Thought Leader Insights: Planned Giving

Q: If there’s a deeper economic down- turn in 2023, should we expect changes in levels of giving? A: I haven’t seen numbers from the past, but logic would dictate that when people are watching their budgets more closely and cutting their expenses, that dis cretionary charitable gifts might fall as a result. But what’s interesting in the numbers from the pandemic in 2020 and 2021, in which you’d think that with the uncertainty of everything going on, that charitable gifts would fall, but actually, charitable contribu tions have gone up. That’s something I found interesting and reflects what we’ve seen. We certainly haven’t seen a dip in interest from our clients with their charitable giving or their philanthropic planning, and the numbers back that up. A: It would be wise any time there’s a significant market correction or broader downturn, to re-evaluate as part of a com prehensive review of your finances, to see whether certain expenses still make sense. If charitable giving is part of your budget, you’d want to evaluate that. It’s clear that people are making gifts because those causes are important to them, especially when there are events occurring that highlight various needs, whether that’s disaster response the war in Ukraine, the pandemic response— people are responding to those needs, which reflects well on us all, in general. A: A lot of times with our clients, we’re part of a team they have assembled, we’re on the legal side, so they have separate tax advisers, financial advisers, life-insurance professionals. We’re all part of the same team, and we encourage regular discussions with clients, with everyone a that table. If we’re sitting with a client and conditions are such that we think it appropriate that Q: Are there recommended steps that donors need to be thinking about? Q: When you talk about a compre hensive review, what’s the process?

Q: Are you seeing any changes in giv- ing strategies? A: Some people can contemplate a sizeable charitable gift right away; others are looking at making a sizable gift at death, incorporating that as part of their estate plans. One factor in the equation, and that’s what you’re planning to do after the sale occurs. Some will make the decision to become an active philanthropist, and that’s a natural transition for them, coming out of the business world. A: There’s no shortage of people and families here who are instantly looking to philanthropy when a big event occurs in their lives. If you look around this city at the numbers of foundations set up and non profits, you can see the tangible impact of the work of charitable dollars both big and small. We have large foundations created by some of the wealthiest families in the city, and organizations funded with smaller con tributions from the public at large. We all benefit from that. Q: What broad trends are you observ ing in the way planned giving is executed today vs. where it might have been just a few years ago? A: There definitely has been a trend to donor-advised funds. Those are an extremely popular vehicle. A lot of the attraction is due to the simplicity of creating a fund; the Greater Kansas City Community Foundation and other organizations make that a pretty painless process. The flex ibility they have to conduct grant-making out of their fund, and the timing of those contributions, is really attractive. Compared to private foundations or charitable trusts, it’s generally much simpler to create the donor-advised fund and operate it, because you have the backing of a public charity to maintain and operate the fund. There’s definitely a strong trend in that direction. Q: What about numbers of people en- gaging philanthropically?

they take a fresh look at their situation, we recommend they get in touch with their financial adviser or tax adviser if they are considering strategies that affect taxes for that year. Really, any time when it’s appar ent to us that they need to be thinking about their financial situation as result of market conditions, or a change in circumstances for the family, retirement—the big changes, the life changes they are encountering. You always want a re-evaluation of their current situation, looking at their budget, and finan cial statements, and hoping they have a good team of financial advisers, money managers and whoever else needs to be involved to dig into the numbers there. If charitable plan ning is part of the normal budget, they just have to evaluate whether it makes sense to stay current, decrease their giving or even increase it if things are going on where they feel compelled to give and can make it work. Q: Do those same economic concerns dictate any additional caution for those who have been part of the recnet boom in M&A activity? A: Depending on when those events occur, other factors obviously are in play— buyers are involved and you’re at the mercies of other things that determine when a deal closes. I can tell you when we have clients about to sell or have a significant liquidity event, it’s pretty common for the subject of charity to come up. That’s something we mention as a normal talking point, a pre-sale planning opportunity, making a gift of your business interest before the sale. There can be significant tax benefits if you do so, as opposed to after the sale closes, with those proceeds. I’ll tell you, often, that comes up before we even mention it. These clients have philanthropy in mind and have clearly thought about it. Our job is to steer them in the right direction and advise them on their options. Whether it’s a pre-sale gift or from the proceeds, there are clearly people who are looking to give back in some meaningful way and not doing it just for the tax benefits.

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December 2022

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