Avestar Capital Shapes Philanthropic Strategies

Featured image by Mary Long

Financial security is essential, but in today’s world, true wealth goes beyond a growing bank account. Forward-thinking individuals recognize the strategic power of philanthropic strategies as well.

For high-net-worth individuals looking to make a meaningful difference in their communities, understanding the nuances of strategic philanthropy can transform charitable giving. Instead, their simple acts of generosity can become powerful tools for change.

A Systematic Approach to Philanthropy

Traditional charitable giving, of course, typically involves donating money or resources to a cause or organization. However, much of the time donors do not necessarily consider the long-term effects or outcomes of their donation. This form of giving is valuable and necessary. Nonetheless, it often lacks the focused strategy needed to address complex social issues effectively.

Strategic philanthropy, on the other hand, goes beyond the act of giving. Instead, it involves a deliberate and systematic approach to philanthropy, where donors align their contributions with specific goals and measurable outcomes. This form of giving maximizes the impact of donations. Moreover, it ensures that every dollar spent contributes to significant, long-term change.

Avestar Capital, a boutique financial advisory firm, fosters a distinctive approach to philanthropy. They curate a network of clients who share a passion for giving back. This network creates a powerful synergy, allowing clients to leverage each other’s resources and expertise for powerful charitable endeavors.

Addressing the Legal Requirements

In the US, financial advisors should report their business and individual incomes on tax forms similar to those all other small business owners use. Those who function as sole proprietors must report all business income and expenditures on Schedule C. Others must file partnership or corporate tax returns. Income is taxed at the federal, state, and regional levels. 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. It and may also be tax-exempt at the state and regional level, depending on where you reside. Tax-free interest payments make municipal bonds more attractive to investors.

Donors’ Various Reasons to Give

Contrary to popular belief, philanthropy doesn’t primarily transfer wealth from the rich to low-income individuals. On the contrary, in the US, the world’s most philanthropic nation, only about one-fifth of donations from wealthy individuals go to the underprivileged.

Much of the funding supports arts, sports, education, and healthcare. Philanthropy often includes public money through tax relief. This allows wealthy donors to direct funds to their chosen causes while benefiting from tax incentives. Western governments offer generous tax incentives to promote charitable giving. Thus, donors can retain control over their donations within legal constraints. This control extends to managing investments and deciding on the final use of the funds.

Ways to Engage in Strategic Philanthropy

There are several ways high-net-worth individuals can engage in strategic philanthropy:

Donor-Advised Funds (DAFs): DAFs allow donors to make a charitable contribution, receive an immediate tax deduction, and then recommend grants from the fund over time.
Charitable Foundations: Establishing a private foundation can provide donors with more control over their charitable giving and allow for a long-term impact.
Direct Giving: Working with donor advisors or philanthropic advisors to identify and support specific causes and organizations enables donors to direct the objective of each charitable gift.

Like direct giving, both DAFs and charitable foundations offer tax deductions to offset large income tax years, such as after selling a business or investment assets. Advantages include tax-free growth of assets designated for charity, strategic deployment, and family involvement in giving decisions, creating a legacy of philanthropy.

By engaging in strategic philanthropy, high-net-worth individuals can make a meaningful difference in their communities while also benefiting from tax advantages. Avestar Capital is dedicated to guiding clients through this process. The firm helps them to maximize the effects of their charitable contributions and achieve their philanthropic goals. In a world where thoughtful giving is more important than ever, strategic philanthropy offers a powerful way to create lasting change.

Conclusion

Philanthropy is a cornerstone of Avestar Capital, deeply rooted in the values of its founding partner, Xerxes Soli Mullan. As a beneficiary of philanthropy himself, Xerxes is committed to embedding this principle within the firm’s core values. He seeks clients who share a desire to give back to their communities, believing that this activity brings genuine happiness and has a significant positive influence beyond merely accumulating wealth.