Charitable giving is at its highest during the holiday season. This is when most people feel the pull to give to all sorts of causes, including local charities, drives to provide for those less fortunate, and more. The time of year when we are celebrating everything we have to be thankful for tends to remind us that there are people out there with less. That often drives us to loosen our purse strings to give back to those less fortunate.
The wealthy also tend to give more freely this time of year. Take Facebook creator Mark Zuckerberg, and his wife Priscilla Chan, who recently pledged $45 billion of their fortune to education and equality-related causes in celebration of their first child, daughter Max.
On Tuesday, December 1st Zuckerberg and Chan posted an open letter to their daughter on Facebook explaining their plan to donate 99% of their company stock over their lifetime. The date of this pledge is significant as the Tuesday after Thanksgiving has now been designated “Giving Tuesday”.
“Giving Tuesday” is dedicated to inspiring people to give publicly. But there are some critics of this new tradition.
A recent article by John Wasik on Forbes Personal Finance stated, “If charities were smart, they’d have ‘Giving Tuesday’ well before Black Friday and Cyber Monday. That way they would get more checks in the door before Americans blow all their cash on the two other days.”
While some are celebrating Zuckerberg’s philanthropy efforts, others are more critical.
When the wealthy donate money they are able to enjoy tax benefits as well as boosting their egos. Sometimes philanthropic efforts are just another way for the wealthy to try and compete with each other, a “keep up with the Jones’” situation with higher stakes than what most of us are used to. This is why skeptics claim that anonymous donations show the true nature of giving, rather than giving just to increase your own visibility in the media.
On the other hand, the visibility of Zuckerberg’s “Giving Tuesday” donation has increased the value of his gifts as it has been a topic of constant conversation over the past few weeks. This raises the public’s awareness of the charities and causes Zuckerberg endorsed and will likely inspire others to donate as well.
Another wealthy individual that uses his fame to increase philanthropy is billionaire investor Warren Buffett. Buffett encourages other billionaires to pledge at least half of their fortunes to charity.
One significant drawback is that the wealthy have to be strategic in how they decide to donate to charity. For example, when Zuckerberg and Chan donated 18 million shares of Facebook stock, valued at $990 million, to the Silicon Valley Community Foundation in December 2013, they did so to avoid paying capital gains tax.
According to Keith Braun, attorney with Comiter, Singer, Baseman & Braun, “If Zuckerberg sold the stock and made a cash gift, he would have had to pay capital gains.”
No matter if you think Zuckerberg’s philanthropic gesture was genuine or to boost his ego, the wealthy can still follow his example and the less fortunate will still benefit from donations no matter if the reasons behind them are noble or not.
Do you need to re-evaluate your charitable giving plans? Contact us at Parrish Capital and we will help you create the plan that meets your specific needs.