Generous Giving Conference summary

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I just sent L____, our CPA, a summary letter explaining “where we are” in the legacy planning process. Most of what I had to say came from our weekend in Colorado Springs at the Generous Giving conference:

[While at the] “Generous Giving” conference, . . . I had the opportunity to speak with a number of counselors who specialize in the field of legacy- or charitably-oriented estate-planning and with people who have pursued, or are in the midst of pursuing, goals similar to ours.

I asked several of these people for their input on the idea of switching to a 501(c)(3) . . . especially considering–or “if”–there would be UBTI [Unrelated Business Taxable Income]. None of them was immediately smitten with the idea [of switching to a 501(c)(3)]. However, I will say that only one registered an immediate, strong, negative reaction to the idea of restructuring to 501(c)(3) . . . and he is a serial entrepreneur himself.

He said he and his wife had considered going 501(c)(3) with a number of their companies, but abandoned the idea due to that sense of always having to “look over your shoulder” at what the government might have to say.

Actually, this man and his wife really caught Sarita’s and my attention. One of the things they talked about was a company they have started in which, they said, they are giving away 100% of their profits. I asked him how it is possible to give 100% of one’s profits.

“It helps,” he said with a wry smile, “to own several companies.”

But in essence, he said, they drive their profits to zero by making sure they hire as “consultants” whatever missionaries or others they want to support, or, instead of making a “gift” to an organization, they place (business expense) “ads” in one of their chosen target non-profit organization’s publications. . . .

Okay. Kinda. Except, how do we maintain a “balance” between the kind of hyper-efficiency we want in normal corporate operations and the obvious profligacy associated with these kinds of charitable donations? . . . I asked him the question, and I’m not sure he really gave me a reply.

I think Sarita and I have enjoyed the benefit of maintaining a strong, arms’-length distinction between our different entities and between our for-profit endeavors and our charitable pursuits. . . .

One additional suggestion this man suggested (though he had no personal experience with the concept): “Look into the ‘LLC Wrapper’ option that the National Christian Foundation offers.”

*****

Other counselors were more measured in their responses and said, more or less, “We’d really need to look at the specifics of your situation to make any kind of recommendation about going 501(c)(3).”

*****

I spoke with a few people, including David Wills, president of the National Christian Foundation (and, it turns out, a long-time Sonlight Curriculum customer), about the “LLC Wrapper” idea that our first contact shared. No one said anything about that particular strategy, but David made a number of comments about the 501(c)(3) proposal.

1) He said that we shouldn’t consider UBTI as an evil (as it were) to be avoided at all costs. “We [at NCF/National Christian Foundation] pay lots of UBTI.”

2) Similar to what B____ [our estate planning attorney] has said on a number of occasions . . . something along the lines of . . . “You SHOULD pay some taxes. You should EXPECT to pay taxes.” (I don’t recall if he added the comment–also similar to what Bruce has said–that the government is a form of charity, but I almost get the feeling that was something he said.)

David offered to have one of their attorneys (apparently, they have close to a dozen attorneys who specialize in this entire area of charitable law) analyze our situation and render a “second opinion” on J____’s proposal . . . at no charge.

*****

As a result of all that has transpired, here is what Sarita and I have done and are intending, yet, to do:

1) Hold off on having C____ [the structures attorney J____ wanted us to use to help us transfer to 501(c)(3) status] do anything.

2) Send J____’s proposal to David to get that “second opinion.” [I've done this already.]

3) Find out more about the LLC Wrapper idea. [Interesting: I had to do some "deep research" online to find one cached page in Google that mentions it--back in October 2006. But there is nothing current on the subject. --This morning, I left a phone message at the CFTriangle office to "tell me more."]

4) Based on NCF’s second opinion, and whatever else we discover prior to NCF’s answer, decide our best next step. If it includes having C____ do further research, then we will do that.

At this moment, however, we are not at all inclined to move forward with the 501(c)(3) proposal. There are “simply” way too many unanswered, and deeply troubling, questions.

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