Distressing photographs of little children fleeing from terror… Moving videos of mothers trudging on railroad tracks, carrying their infants into the unknown, any place but where they have been… Endless news stories about countries feeling besieged by refugees… The images can be overwhelming. Perhaps they inspire in you the desire to help, if only you knew how.
Just the other day, one of my clients asked me how she could include more charitable giving in her financial plan. She already had estate provisions for transferring some of her assets to her favorite causes when the time comes. And she makes annual gifts to her local food bank, hospital and art museum. But she wanted to do something meaningful, now, to help Syrian refugee children.
She had done her homework to identify worthy organizations through whom she could channel her giving. She told me that she had checked out online links provided by the major TV networks and found some agencies which promised that 100% of her gift (or close to it) would go directly to aid refugees and children in particular. Then she checked out Google and other internet search engines to learn more. She knew where she wanted to donate her financial gift.
The question my client was facing was, how much could she afford to give? She was willing to make some personal sacrifices, but she felt lost in deciding exactly what to do. She remembered my advice about not making financial decisions based on emotions and didn’t want to make a mistake. But she also felt strongly about wanting to help. So we arranged to meet during her lunch hour.
We reviewed her written investment policy and her long-term financial plan. We discussed her personal and family goals. We examined the overall health of her assets. And we looked at her current charitable impulse in the context of her life.
The fact was, in her case, that her investments had been doing well, and a few of her holdings were showing significant capital gains. It was looking fairly probable also, that before year’s end, we would need to do some rebalancing in her portfolio so that we could “harvest” some capital losses in certain assets. In other words, if we sold some holdings at a loss, that loss would counterbalance the tax consequences of the gains she had experienced.
I told her we could wait and see how things looked closer to the year’s end, at which point we could sell an appropriate amount to raise the necessary cash to make a gift. Or, if the agency she selected would accept a non-cash gift, she could make a donation in the form of some securities which had gained in value, and she wouldn’t incur a tax on that particular gain. But she didn’t want to wait, because she felt that the refugee children couldn’t wait.
After a calm and honest conversation, I helped my client decide how much she could donate if she did it now. We made sure she would have enough cash flow to meet her needs and not jeopardize her retirement plan. After reviewing the numbers, we determined that she could make a donation that felt meaningful to her. I told her we would work out the details from there.
If you are feeling the urge to help those in need and aren’t sure if you are in a position to do so, I encourage you to consult a trusted financial professional. And if now isn’t the right time for you, you may want to revisit the idea in December. Making a charitable gift may not only help others, it may be a smart financial decision.
[Photo credit: IOM Iraq]