Case Study: Executor to multi million dollar estate partners with Phila Engaged Giving to create a lasting legacy for beloved friends

Written by Elizabeth Kain

In 2014, Claudi Wilson found herself executor to the estate of beloved friends she had known for more than forty years. Martin (Marty) and Jeanette (Jan) Manhoff had entrusted Claudi with their legacy but had provided little guidance on how to move forward after their passing. The will stated only that Claudi should consider any nonprofit of which she thought they would approve. While she had great partners in her lawyer and investment advisor – not to mention friends of Jan and Marty - she yearned for expertise not only in how to create a lasting legacy for her friends, but also how best to distribute their beloved possessions.

   Claudi with Jan      “I felt this huge sense of responsibility. They were people I loved very much, and I wanted to create a lasting legacy. It was incredibly important to me.”        – Claudi Wilson

Claudi with Jan

“I felt this huge sense of responsibility. They were people I loved very much, and I wanted to create a lasting legacy. It was incredibly important to me.”        – Claudi Wilson

Background

Marty and Jan met as art majors at the University of Washington. Upon graduation, they immediately set out to support the allied effort in World War II. Following the war, they wed and Marty accepted a position to serve as military attaché in the Soviet Union during Stalin’s regime.  After ten years in Europe, they returned home to Seattle and opened Bottega, a contemporary home-furnishings and housewares store. It was here where Claudi first met the Manhoffs.  She felt an instant connection with the couple; Marty’s kindness made an immediate and lasting impression, and she and Jan shared a passion for art. Claudi worked for them for three years and during this time, as they provided more and more opportunities for her to explore her own creative passions, she was inspired to pursue a career as a designer, eventually landing the position of Creative Director for one of the major television networks.  

Over the years, Claudi kept in touch with the Manhoffs, attending Jan’s art shows and catching up with calls, but it was only after her mother’s passing that she reconnected on a deeper level and was once again welcomed into the Manhoff’s life as their surrogate daughter. She learned that Marty had Parkinson’s disease and looked after both him and Jan as his illness progressed. Finally, just before Marty passed in 2008, she promised him she would take care of Jan once he was gone. Claudi looked after her for the next six years, until Jan died in 2014.

Claudi felt an enormous sense of responsibility to the Manhoffs and knew she did not have the experience to manage their estate on her own. While she was committed to creating a legacy that would serve well the memory of her friends, she was overwhelmed at the prospect of determining what this might look like and then seeing it through. Marty and Jan were devoted to art, but they also treasured time at their cabin in the San Juan Islands. Finding a way to support these diverse passions was daunting. Her trusted investment advisor and a lawyer could not advise on some of the philanthropic complexities of the Manhoff trust. As Claudi shared her concerns with friends, one put her in touch with Stephanie Ellis-Smith at Phīla Engaged Giving.

Why Phīla?

Phīla Engaged Giving works with individuals, families, estates, foundations and businesses that know they have been financially rewarded and are interested in sharing those rewards with the community. When Stephanie founded the company, her goal was to help her clients understand the issues that move them, learn from experts on the ground who are doing the work and make high-impact investments in groups that best align with their interests. She values candid and personal explorations into people’s values and beliefs, life experiences and aspirational goals.

“Of course, I could do the research, but the questions Stephanie asked and the expertise she offered made a tremendous impact on my philanthropic decisions. I feel so happy with my choices. They were a perfect reflection of the goals I outlined at our first meeting.” – Claudi Wilson

When she met Stephanie for the first time, Claudi was impressed. She immediately had the sense that Stephanie was asking the right questions, and she felt comfortable sharing her hopes and aspirations for a philanthropic advisor as well as what she wanted to accomplish on behalf of Jan and Marty.  As Claudi explained what issues were most important to them, Stephanie provided her take on the two areas of interest – the arts and the San Juan Islands archipelago north of Seattle. Later, she developed a list of potential organizations whose missions matched the Manhoff’s passion and goals, as described by Claudi.

As the relationship between Stephanie and Claudi deepened, Claudi confided other challenges she was facing as she sold or auctioned Manhoff possessions to increase their financial impact. Voracious readers, the Manhoffs had left a considerable collection of books; unfortunately, wholesale book sellers wanted to cherry pick the best volumes, leaving Claudi with hundreds of volumes for which she would have to find new homes. Stephanie took on this and other challenges with zeal. Not only did she find libraries that would take each and every tome, to Claudi’s huge relief, she arranged for them to picked up and transported to their new locations. She also successfully placed Jan’s art in strategic locations or arranged for it to be auctioned for the benefit of local artists.

As Claudi worked with Phīla to narrow the choices for her financial gifts, Stephanie arranged for Claudi to meet the staff at the organizations who were likely to be the best fit. This semi-formal interview process allowed Claudi to get to know the people doing the work, understand how they evaluate their progress, and then to determine her level of involvement going forward. Stephanie facilitated proposals to Claudi on how the Manhoff’s donations would be used and tracked. Most importantly, she laid the groundwork for a strong and lasting relationship between Claudi and the ultimate recipients of the Manhoff Estate.

The Outcome

“I knew Stephanie had understood the Manhoffs when I ran into a couple of Jan’s friends and they mentioned that the organizations Stephanie had recommended would be a good fit with Jan and Marty’s values.” – Claudi Wilson

At the end of the months-long process, Claudi selected two organizations to be recipients of the Manhoff estate: one focused on supporting local artists and another dedicated to conserving land in the San Juan Islands. Both organizations had provided a clear roadmap for how the gift would be used, a timeline for implementation and expected outcomes. A year later, Claudi now considers the staff friends and feels comfortable calling whenever she has questions. Claudi remains involved in both organizations’ activities to the extent she wants to be and feels she has a far greater knowledge of philanthropy than when she started. Most importantly, she feels confident about the legacy she has created on behalf of the Manhoffs.

 

 

My Take on Your Philanthropic Plan: Five Things to Consider

I talk with people every day who are thinking about beginning or expanding their philanthropic giving. This includes both individuals who have a few extra dollars they would like to contribute to those who are looking to make a significant impact with their giving. Whether you have $5 or $5 million, many of the steps toward building a meaningful philanthropic plan are the same. What’s my take on how best to get started or infuse your current philanthropy with renewed vigor?  Don’t wait. Get started on your plan for giving today. After all, your talent, time and treasure are needed by organizations all over the world NOW.

So where and how should you begin? Here are five things I recommend you consider as you embark on creating your philanthropic legacy:

1. Get to know new organizations. Many people devote endless hours researching which schools are right for their children, the perfect car to meet their needs or the right neighborhood to buy a home. As with these important decisions, I recommend you spend time and energy upfront learning about the organizations that best reflect your interests and passions. Whether you are interested in supporting youth in need, saving endangered animals, or improving the environment, philanthropy is more than giving money to any one group; it is about pursuing and achieving goals that are most important to you.

2. Take risks. The only way to grow is to diverge from your usual path. In the process, you will make mistakes, but it is all part of the learning process and will you make you better, more educated donor in the long run. As Case Foundation CEO Jean Case said, “To find solutions — and we desperately need new solutions to old problems — we’re going to have to take risks.”[1]  This thinking contributed to the Foundation’s Be Fearless campaign, designed to encourage individuals and foundations to take more risks and be bolder with their giving. An interesting paradox in the philanthropic sector is that the risk-taking nature that defines the entrepreneurial spirit and generates the wealth somehow seems to dissipate as the entrepreneur becomes a philanthropist. The same spirit of ingenuity that defines business can do well in philanthropy, but we tend to become quite conservative instead. That needs to change.

3. Find a community of givers. This includes everything from talking to friends and colleagues or finding a more structured giving community, preferably at your same stage of learning, to broaden your knowledge of your community as well as giving strategies and opportunities. Finding a group of like-minded people to help is especially important for those who are new to philanthropy and having to tackle challenging questions and complexities specific to their personal situations. A philanthropic advisor can help you connect with peers to make your giving more fun and rewarding.

4. Go deeper into the giving area that resonates most with you. Learn from experts in the field and become an informed donor. This will not only provide you with an understanding of what is happening in your particular area of interest but also why and how issues persist. For example, while animal lovers may be interested in supporting organizations that fight poaching elephants in Africa, they should also understand what lies behind this issue. Why does this problem persist despite millions of dollars spent trying to curb it and laws in place to punish those involved? Are there organizations they can support that address the underlying issues creating the challenge in the first place?

5. Stay engaged.  Once you’ve pledged your financial support, look for opportunities to volunteer as a community member or on a board. Learn the intricacies of the non-profit sector and commit to being an active participant in the world around you. Why is this important? For one, learning about the issues that move you most from “the trenches” is crucial to understanding. The best way to assess the impact of your giving is to see it put to use first hand. And perhaps most importantly, in this age of online engagement, volunteering allows you to join a community and build strong relationships with likeminded people.  According to Psychology Today, those who volunteer will also live longer and lead happier and healthier lives.[2] The time to act is now; join the more than sixty million Americans who volunteer each year.[3]   

Embarking on any philanthropic journey requires a clear understanding of the motivations behind it. Many people already have some idea of what passions they possess, and they often change over time. At Phila Giving, we can help you explore the motivations behind your giving, what your charitable goals are, and how you want to make an impact. That said, I encourage you to starting planning today – with or without us - to make the world a better place tomorrow. Have questions or comments about my take on this issue? Contact me at stephanie@philagiving.com.

 

[1] Susan Wampler, “Case Foundation CEO encourages Risk Taking in Philanthropy,” May 19, 2015, https://news.usc.edu/81796/case-foundation-ceo-encourages-risk-taking-in-philanthropy/, (accessed February 15, 2018).

[2] Dawn C. Carr, “5 Reasons Why You Should Volunteer,” March 12, 2014, https://www.psychologytoday.com/blog/the-third-age/201403/5-reasons-why-you-should-volunteer, (accessed February 14, 2018).

[3] Bureau of Labor Affairs, “Volunteering in the United States, 2015,” February 26, 2016, https://www.bls.gov/news.release/volun.nr0.htm, (accessed February 14, 2018)

Tax Cuts, Jobs Act and Philanthropy: My Take

Welcome to 2018!

As I reflect on the events of the last twelve months, I find myself focused on the Tax Cuts and Jobs Act of 2017, passed just before the New Year dawned, and its impact on philanthropy. The bill, which provides the most comprehensive revision of the tax code in decades, left many scrambling to understand the newly wrought changes and their implications.

Giving is a deeply personal act. Most donors do not cite tax implications as the primary motivation of their philanthropic activities.  Instead, key drivers of philanthropy tend to be rooted in personal values, an organization’s mission, and a desire for social change. That said, we cannot ignore the role the IRS plays in how we translate our assets into an expression of generosity. Phila Engaged Giving supports legislation that fosters and encourages philanthropy in making meaningful financial gifts to organizations that best align with their interests. We will track and monitor all legislation impacting philanthropy and continue to report our findings here.  

As the weeks and months unfold, we will gain a clearer picture of how the new bill will impact the philanthropic sector. In the meantime, there are a few certainties. Below is a bird’s-eye view of tax code changes and how they might affect philanthropic giving and you as a donor.

The Charitable Deduction

Despite fears leading up to the passage of this bill, the philanthropic community was relieved to find that the Charitable Deduction remained intact under the new tax code. As before, you may deduct charitable contributions of money or property to qualified organizations if you itemize your deductions. For some making large donations, the new code may even provide further benefit; for example, the maximum amount for charitable gifts deducted from a donor’s gross income increased from 50% to 60%.

The Standard Deduction

The Standard deduction taxpayers can take without itemizing each of their charitable gifts during the year was doubled from $6,000 to $12,000 for individual filers and from $12,000 to $24,000 for couples. The expansions will likely increase the number of taxpayers choosing the standard deduction rather than itemizing those gifts. Charities fear that the modification has the potential to disincentivize charitable giving, especially for those giving between $1,000 and $10,000 a year, because people who no longer choose to itemize their deductions may also decide not to donate to nonprofits. The effect of the modification of the Standard Deduction is the new tax code’s greatest unknown in terms of impact on charitable giving.

The Estate Tax

Like the Standard Deduction, the Estate Tax was doubled from $11 to approximately $22 million for couples, which shields all but the very wealthiest from the tax. Previously, the estate tax served as an incentive to the wealthy to donate parts of their estates to avoid a penalty. While its absence has the potential to impact larger charitable gifts, this is far from certain, as the overall tax environment with respect to philanthropy remains positive. We will have a clearer picture of the positive or negative impact on charitable giving in the months to come.

Donations of Appreciated Assets

The rules that allow people to donate appreciated securities and other assets to charities to avoid capital gains taxes did not change.

Donations from Individual Retirement Accounts (IRAs)

The rules on charitable donations made from IRAs remained intact; however, donors may revisit these kinds of gifts, which now appear more attractive relative to other options. People over seventy and a half must still make minimum distributions from their IRAs and are taxed on the amount they use; however, they are able to donate up to $100,000 to charity tax free while still counting for the minimum distribution. That begins to sound like a good decision when compared to leaving an IRA in your estate at death.

Donor Advised Funds (DAF)

There are no changes in the new tax code that impact Donor Advised funds. Donors who experience a liquidity event or otherwise have a high taxable income in one year, however, can as before contribute multiple years’ philanthropic giving into their DAF. This enables them to receive a tax deduction for the entire sum at one time while still benefiting from the standard deduction in years following.

Our deep desire to share with others our good fortune may be simple, but – sadly - can get caught in a web of rules and regulations. I hope this brief summary of some of the changes and implications of the Tax Cuts and Jobs Act of 2017 on philanthropy will spur new thoughts, insights, and conversations about your plan for giving in 2018. While its impact is still unfolding, my take is that the net result of the modifications will be neutral for most donors.

As always, I suggest that before you make a final decision on your philanthropic program, you consult with your planning team, including your financial, tax, and philanthropic advisors; estate planning attorney; and insurance brokers, to ensure that the change in the tax code results in a compassionate and thoughtful deployment of your charitable funds that best serves you, your family and your community.

Please feel free to contact us at Phila Engaged Giving if you’d like help understanding the evolving community needs resulting from the introduction of the new tax code. We are happy to assist you as you navigate your philanthropic path forward.

Here’s wishing you a Happy and Prosperous New Year!