I had planned to take a break from discussing what’s going on in the markets and the world’s craziness in this quarter’s newsletter and focus instead on charitable giving and some of the charitable activities of White Pine employees.
El Salvador decided to try to establish Bitcoin as their national currency and a JPEG file in the form of an NFT sold for more than a Monet painting.
This isn’t like a print of a Monet that resembles the original. It will be exact down to the last bit that makes up the file. Only one person can hold the original file, but anyone can hold an exact copy. If you don’t understand why something like that can be sold for $70mm, then I think you understand the concept just fine. I’ve enjoyed the Netflix series, Ozark, so I suppose Marty Byrd could figure out a money laundering use for them. Meanwhile, drug cartels in El Salvador will probably enjoy capitalizing on the anonymity of Bitcoin.
The market has been very strong for over a decade now with The Great Recession far behind us. Yet, the recovery hasn’t benefited everyone equally. As such, many of our clients choose to build charitable giving into their financial plans. Volunteering is a great way to help others in our communities, but this isn’t always possible due to physical limitations or time restrictions. Donating cash, however, is always appreciated by these non-profit organizations. While a direct donation is quick, easy, and very helpful, there are strategies that may give you more bang for your charitable buck.
Many organizations accept appreciated securities. They can then sell the security and get full value. If you were to sell that same security to write a check, you would have to pay a capital gains tax on the appreciation. That tax ranges from 15% to 20%. If your income is high enough, there’s an extra 3.8% tax added. Your state may tax it as well (in Michigan, that rate is 4.25%). Finally, if the gain was short-term, you’ll pay ordinary income taxes which could be as high as 37% plus state taxes.
Last quarter, a few White Pine employees volunteered for Our House and HouseN2Home. My wife, Laura, volunteers at HouseN2Home, an organization that helps people who are exiting homelessness by using donated furniture and household goods to convert houses into functional, comfortable and inviting homes. My daughter, Anna, works at Our House. Their mission is to help young people confidently and successfully transition from foster care to adulthood. For their newest program, they’ve leased an old sorority house near Eastern Michigan’s campus.
These are just a few of the basics on charitable giving. We’d be happy to discuss building charitable giving into your financial plan using these techniques. Also, if you’re interested in learning more about some of the charities we talked about in this newsletter as well as about a few others that White Pine employees feel passionate, please go to the web page we created that has links to these organizations. All, I’m sure, would love to connect with you. We’ve found we derive the most meaning and pleasure when we focus our giving on areas about which we are passionate. Perhaps, the same holds true for you.
Sincerely,
CFA® Chief Investment Officer