Giving Beyond a Lifetime

By Dave McGowan

Did you know that approximately 10% of estates include a provision for a charitable distribution? It’s a great way to leave your legacy and to ensure that the organizations you supported during your lifetime will continue to benefit from your generosity. As I mentioned in my May article, most organizations deposit all or a majority of estate gifts into their endowments, which continue that support by generating earnings for annual distributions.

According to the National Association of Charitable Gift Planners, America’s earliest immigrants brought with them a long tradition of providing a charitable bequest: four Mayflower Pilgrims made gifts to their churches through their written wills in the 1600s. Grateful trustees renamed their new college in honor of John Harvard’s bequest in 1638. From 1636 to 1712, Harvard College received three times as much money from bequests as from lifetime gifts.

As reported by Giving USA, charitable bequests have consistently represented between 7% and 9% of total giving in the United States over the past four decades.

Your estate has the potential to be distributed among three categories of recipients: your heirs, charitable organizations, and the government through estate taxes. Distributions to charitable organizations decrease the amount you can provide for your heirs. For example, a couple with two children and an estate valued at $2 million could bequeath $100,000 to charitable organizations and $950,000, rather than $1,000,000, to each child. Hopefully, that’s not a game-changer for the children, but the $100,000 will most likely be a game-changer for the charitable organization.

And why disinherit the organizations and causes that mattered to you during your lifetime? Typical charitable beneficiaries include one’s house of worship and alma mater but can also include your local food pantry, museum, and social service agency, among others. If you aren’t sure which organizations you wish to support, you can make a charitable distribution to your local community foundation into its unrestricted grantmaking fund or into a field-of-interest fund such as animal welfare, arts, education, environment, health, and/or human services.

The best asset to use for charitable giving from your estate is your retirement account (IRA, 401(k), or 403(b)). Your plan administrator can assist you with the process, but it is usually quite easy to change or add beneficiaries and their percentages online. Other ways include naming a charity as the beneficiary of a life insurance policy or as a beneficiary in your will or trust. It is recommended that you discuss your charitable planning—both during your lifetime and through your estate—with your financial planner and estate planning attorney. You should also contact the organizations you wish to provide for in your estate plan, especially if you are restricting your gift, to be sure the organization can honor your restriction.

Dave McGowan has been a Chicago-area not-for-profit executive since November 1981.

He is a certified fundraising executive who retired from DuPage Foundation after 25 years in December 2022, before starting davemcgowanconsulting.com, serving donors, their advisors, and the not-forprofits they support. Dave can be reached at dave@davemcgowanconsulting.com.