Q3 Market Commentary | Despite posting strong returns over the summer, global equity markets began to lose steam by the latter half of September.
"The greatest problem we face today is the proper administration of wealth,
so that the rich and poor can live harmoniously."
- Andrew Carnegie
Andrew Carnegie wasn’t always a wealthy man. He was born November 25, 1835, in Dunfermline, Eife, Scotland and had very little formal education, but his family believed in the importance of books and learning. After moving to the United States from Scotland at age 13, Carnegie worked a series of railroad jobs. By 1889, he owned Carnegie Steel Corporation, the largest of its kind in the world. In 1901 he sold his business and expanded his philanthropic work, including the establishment of Carnegie-Mellon University in 1904. He spent the last 18 years of his life giving away what he called "excess wealth" to public causes, just as he outlined in 1889 in his book The Gospel of Wealth. Carnegie claimed that charity should act as a ladder, which the worthy would climb.
I remember learning that Andrew Carnegie believed that if you gave people access to learning, good books and culture they would be inspired to a better life. Education wasn’t just found in the universities; it was wherever one could access knowledge.
Your Giving Plan
It is the season when many charities are asking for help; it’s giving season. You may not be a wealthy industrialist like Andrew Carnegie, but there are some nice ways you can consider setting up your own giving plan. We have introduced the concept of Donor Advised Funds (DAF) to many clients. I personally set one up and have enjoyed using it to fund several causes. It is a tax smart way to establish a fund that can be used for your personal giving through grants to charities for your lifetime and beyond.
Here’s how it works:
You open an account naming it as a charitable fund. For example, The John and Mary Jones Charitable Fund. It is an online process. You contribute either cash or appreciated assets. The contributions are generally tax deductible by the donor in the year that they are paid to the DAF. You can name specific charities you’d like to honor or general descriptions of the kinds of 501c3 charities you would support. A sample might be education, humanitarian relief, social services or environmental causes.
A Donor Advised Fund is like a private foundation but requires less money, time, legal assistance, and administration to establish and maintain. Because the DAFs are public charities, they also can enjoy greater tax advantages than private foundations. The amount of the deduction depends on several factors, including the amount of the contribution, the type of property donated and the donor’s adjusted gross income (AGI). Always consult your tax professional for tax advice. We can offer information regarding Donor Advised Funds. Time is always important in getting things done in the last quarter of the calendar year.
Charitable Contributions from IRAs
The Pension Protection Act of 2006 first allowed taxpayers age 70 ½ to make tax-free charitable donations directly from their IRAs. These taxpayers are allowed to exclude from gross income otherwise taxable distribution from their IRA (“qualified charitable distributions,” or QCDs), up to as much as $100,000, that are paid to qualified charities. It was to be a temporary law expiring but was periodically renewed. It was made permanent in the Protect Americans from Tax Hikes (PATH) Act of 2015.
QCDs count toward satisfying any required minimum distributions (RMDs) that would otherwise have to be taken from your IRA. They are calculated against the RMD just as if you had taken the distribution. Caution: You cannot give to private foundations or Donor Advised Funds. QCDs must be to qualified charities directly. However, entities such as schools or churches along with all 501c3 organizations can be OK.
If you want to know more, please contact your Mercer McGee team.
The Givers Among Us
I am blown away from the stories I hear about people who have given so much to others. Many times, it isn’t money that matters but a selfless personal gift. Our dear Carolyn Muller has given blood to the Red Cross for over 40 years. She has donated more than 220 pints to date and is still adding to that tally. Carolyn’s gifts of blood are certainly selfless and lifesaving.
I met a fantastic lady while running an errand this week. She has sewn over 15,000 face masks and sent them to countries all over the world. She sends them in shipments of 1,000. Her beautiful facemasks have been sent to Mexico, Guatemala, Haiti and the next ones go to Nigeria. Again, a selfless effort.
Have a wonderful week.
Judith McGee, L.H.D., CFP®, ChFC®
Executive Vice President and Senior Lead Advisor
The latest employment figures for October are available at the end of this week. September saw 194,000 new jobs added, although the unemployment rate continued to fall, settling at 4.8%. The Markit purchasing managers surveys for manufacturing and services are also out this week. Survey respondents have noted that supply bottlenecks and labor shortages have hindered overall production.
Source: Broadridge Investor Communication Solutions, Inc.
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