Xerxes Mullan, Founding Partner at Avestar Capital, firmly believes in the saying, "To whom much is given, much is expected." If you have heard this pure piece of wisdom, you know it means that we are held responsible for what we have. If we have been blessed with a unique talent, abundant wealth, knowledge, time, and the like, we are expected to benefit others from the same.
The global financial advisory boutique Avestar Capital works with several non-profits across the client networks. The aim is to possess clients who can take advantage of each other's balance sheet for the art of philanthropy and giving. This network effect is exponential as other like-minded individuals will tend to possess similar principles.
In the United States, financial advisors should report their business and individual incomes on similar tax forms as all other small business owners. Those who function as sole proprietors must report all business income and expenditures on Schedule C, while others must file partnership or corporate tax returns. Income is taxed at the federal, state, and regional levels, and earned income is subject to additional taxations to fund Social Security and Medicare, to name some.
Buying a municipal bond primarily means lending money to a state or regional governmental entity for a set number of interest payments over a predetermined period. Once the bond reaches its maturity date, the entire amount of the original investment is repaid to the buyer. Interest on municipal bonds is excluded from federal taxes and may be tax-exempt at the state and regional level as well, depending on where you reside. Tax-free interest payments make municipal bonds more attractive to investors.
Two of the most-liked charitable vehicles are donor-advised funds and private-owned foundations. As with direct giving, they can both provide a tax deduction to offset a huge income tax year following the sale of, for example, a business, investment assets, or real estate. Some advantages to this could be tax-free growth of assets earmarked for charity and accumulation for strategic deployment and involvement of other family members, including younger generations, in decisions about giving. It will also give a legacy of charitable giving long after death.
Philanthropy’s popularly supposed to transfer money from the rich to the poor. This is not the case. In the United States, which statistics show to be the most philanthropic of nations, barely one-fifth of the money donated by big givers goes to the poor. A major chunk goes to the arts, sports teams, and other cultural pursuits, and the rest goes to education and healthcare/medical expenses. But what the rich are giving away in their philanthropy is not entirely their own money. Tax relief adds the money of ordinary citizens to the causes selected by rich individuals. Most western governments offer generous tax incentives or rebates to promote charitable giving. This enables a philanthropist to get away with liability for tax on the donation, yet also retain control over and monitor how the money is spent, within the constraints of charity law. Donors may make tax-deductible donations to their family foundation and still, as foundation trustees, remain in control of the investment they make and management of the funds as well the final charitable disposition of the gifts.
