PNC CENTER FOR FINANCIAL INSIGHT

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1 PNC CENTER FOR FINANCIAL INSIGHT PNC Center for Financial Insight SM builds bridges from thought to action, creating practical, applicable strategies to help benefit you and your family. Contributing Author: Anne B. Hennessy, CAP Senior Resident - Philanthropy Sharing Values through Philanthropy Discussing values and money can sometimes be an uncomfortable conversation for families, but introducing philanthropy as a topic may be a useful tool to begin these conversations. You may have a plan to transition your tangible assets, but what about your intangible assets such as your values, family history, and personal experiences? Have you defined your values, and how do you express them? Have you shared your values and communicated them in both words and actions with other family members? Discuss and Discover Knowing and understanding your values can be an important yet challenging exercise for any family. Discussing and discovering these issues can help you build a shared vision, create a family legacy, and guide you to a more meaningful and strategic approach to charitable giving. It can also help create cohesion among family members across generations and increase the likelihood you will successfully transfer your wealth and values to them. Family members can help clarify both individual and shared values by reflecting on two questions and discussing them as a family: What are your values? What are your goals, objectives, and priorities? It is not uncommon for multiple generations of a family to have what may appear to be opposing values and interests. Some family members may also express shared values differently. Therefore, it s essential to create an atmosphere where values can be openly discussed without judgment. This is especially important to remember when conveying values through philanthropy. For example, millennials and younger generations are often more research oriented and seek clear, measurable impacts of the gifts they make. They typically want direct involvement with the organizations they support. Also, they are less likely than their Baby Boomer parents and grandparents to donate to large institutions. We believe that family members should discover how their own values shape and define the causes they are passionate about and support. Further, children should be encouraged to embark on their own journey of discovery rather than follow in their parents footsteps. Many families engage trained facilitators to guide them through this process. This can help keep the family focused, manage conflict, and address areas where values may not align. A facilitator will often guide families through the process with a series of exercises and questions, for example: What organizations do you currently support and why? Answering this question will help identify what causes and issues are important to you.

2 September Sharing Values Possible Benefits identifies and cultivates family values; assists in teaching children about money management; engages the next generation to carry on family values and stewardship; prepares the next generation to become leaders; offers educational opportunity for multiple family members since charitable causes may vary; builds bridges between generations; encourages ongoing thoughtful communication; avoids the temptation to impose your values and priorities and inspires family members to discover values for themselves; and maintains flexibility as values and priorities may change over time. What are your interests and passions? What opportunities excite you and what circumstances alarm you? These questions may help clarify, identify, and prioritize causes and issues you deem significant. When are you happy, sad, challenged, and fulfilled? What family stories are meaningful to you and why? The well-known saying you can t know where you re going until you know where you have been seems appropriate in this context. What is your family history? You may wish to document your family history through photos or video. The project itself can help bond family members and create an opportunity for shared learning, memorialized for future generations. What family traditions are meaningful to you and why? Now may be a good time to begin new traditions focused on philanthropy. What experiences in life have affected you and how? What do you want your family legacy to be? What are your short- and longterm philanthropic goals? This helps determine a timeline for charitable giving. Demonstrate Demonstrate your values by your actions. It may not be possible to participate fully with all organizations you support, but you may want to confirm their values mesh with yours. Visit organizations that support causes significant to family members. Meet the staff, and learn about the organization and their work firsthand. What impact does the organization have in its community, for example? What are its challenges? Participate in fundraising events for organizations/ causes you are interested in, for example, walk-a-thons, book sales, and coat drives.

3 September How to Share Values through Philanthropy discuss your values; discover shared and family values; demonstrate by engaging all generations in philanthropic activities; devise a strategic plan to encourage values, family engagement and legacy; and deliver by selecting charitable giving vehicles to put a strategic plan into action. Volunteer for organizations that are meaningful to family members. It may be prudent to ask each family member to select and participate in one volunteer activity. Learn what causes are meaningful to other family members. When donating, avoid online contributions if possible and instead bring the donation to the organization in person. Interact with organizations you and family members are interested in as much as possible to form relationships. You may learn how your gifts of time, talent, and money can be optimized. All in the Family We believe philanthropy is most successful at aligning family values when it is done as a family. There are a number of age-appropriate activities to bring children into family philanthropy, including: Sponsor a child, adopt an animal, or save a tree. The sponsor typically receives information about the beneficiary, pictures, and progress reports to connect the sponsor to the beneficiary or cause. Three jar game Children can divide allowances and cash gifts received among three jars labeled spend, save, and give. This helps children learn money management skills and encourages stewardship. Provide older children with a giving allowance ; they would select organizations to potentially receive a gift and then prepare and present a report on why the selected organization(s) should receive a gift. If a gift is made, have them follow up with the organization, and prepare and present a report on the impact of the gift. This helps older children understand the full cycle and responsibilities of charitable giving. Devise and Deliver It is important to methodically move through the discuss, discover, and demonstrate steps to determine how your values, and those of your family members, could lead you to a particular strategy to devise and deliver. There are several vehicles to facilitate your charitable giving, but keep in mind the choice of a charitable giving vehicle should be aligned with your timeline, goals, and objectives. You can always give directly to charitable organizations you want to support, which is a simple approach and provides an immediate tax benefit.

4 September Many families devise a strategic plan to promote long-term charitable support and family engagement. If you prefer a more structured and strategic approach, you may consider donor-advised funds, a private family foundation, or charitable trusts. The use of charitable giving vehicles is not mutually exclusive; that is, it s not uncommon to use more than one vehicle to help families achieve their charitable giving goals. The various approaches should be carefully reviewed with your financial advisor, legal, and tax counsel to help devise a strategic plan using the options to best meet your goals, objectives, and unique circumstances. Donor-Advised Fund A donor-advised fund (DAF) is an account established at a sponsoring public charity, typically a financial institution or community foundation, used to facilitate giving to qualified charitable organizations. Donors can name their account and recommend grants to be made from their account. DAFs provide donors with flexibility in the amount, frequency, and timing of grants to qualified charities while providing an immediate tax benefit to the donor when the contribution is made to the fund. Private Foundation A private foundation is a legal, tax-exempt entity created to fulfill a charitable purpose by making grants to qualified charitable organizations. Private foundations are generally created, funded, and managed by an individual, family, or corporation. A private foundation may be a preferred vehicle when family members wish to share their philanthropic efforts, desire control over their charitable activities, and hope to have long-term family involvement in the governance structure of the foundation. Although private foundations are highly regulated, the donor retains control of both the grant making and investment management processes. Charitable Trusts There are two types of charitable trusts frequently used in strategic planning. Both are irrevocable and have two sets of beneficiaries, an individual(s) and a charity/charities. A charitable lead trust provides a fixed amount or a percentage of the trust assets to a charity for a term of years or for the life of an individual or individuals. The remainder interest is either retained by the donor or given to a noncharitable beneficiary, usually a family member. In contrast, in a charitable remainder trust the donor can name himself or herself or someone else to receive the trust income stream for a term of years, no more than 20, or for the life of one or more noncharitable beneficiaries, and then name one or more charities to receive the remainder of the trust assets. Please speak with your PNC advisor for more detailed information on these charitable giving vehicles. For more information, please contact your PNC advisor.

5 September The PNC Financial Services Group, Inc. ( PNC ) uses the marketing name PNC Center for Financial Insight SM to provide wealth planning education to individual clients through its subsidiary, PNC Bank, National Association ( PNC Bank ), which is a Member FDIC. Standalone custody, escrow, and directed trustee services; FDIC-insured banking products and services; and lending of funds are also provided through PNC Bank. This report is furnished for the use of PNC and its clients and does not constitute the provision of investment advice to any person. It is not prepared with respect to the specific investment objectives, financial situation, or particular needs of any specific person. Use of this report is dependent upon the judgment and analysis applied by duly authorized investment personnel who consider a client s individual account circumstances. Persons reading this report should consult with their PNC account representative regarding the appropriateness of investing in any securities or adopting any investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. The information contained in this report was obtained from sources deemed reliable. Such information is not guaranteed as to its accuracy, timeliness, or completeness by PNC. The information contained in this report and the opinions expressed herein are subject to change without notice. Past performance is no guarantee of future results. Neither the information in this report nor any opinion expressed herein constitutes an offer to buy or sell, nor a recommendation to buy or sell, any security or financial instrument. Accounts managed by PNC and its affiliates may take positions from time to time in securities recommended and followed by PNC affiliates. PNC does not provide legal, tax, or accounting advice unless, with respect to tax advice, PNC Bank has entered into a written tax services agreement. PNC does not provide services in any jurisdiction in which it is not authorized to conduct business. PNC Bank is not registered as a municipal advisor under the Dodd-Frank Wall Street Reform and Consumer Protection Act ( Act ). Investment management and related products and services provided to a municipal entity or obligated person regarding proceeds of municipal securities (as such terms are defined in the Act) will be provided by PNC Capital Advisors. Securities are not bank deposits, nor are they backed or guaranteed by PNC or any of its affiliates, and are not issued by, insured by, guaranteed by, or obligations of the FDIC, the Federal Reserve Board, or any government agency. Securities involve investment risks, including possible loss of principal. PNC Center for Financial Insight is a service mark of The PNC Financial Services Group, Inc The PNC Financial Services Group, Inc. All rights reserved.