Stewardship vs Fiduciary

Where money and investments are concerned, a fiduciary is a person or organization that owes you good faith and trust and who promises to act in your best interest. The Stewardship Foundation has fiduciary responsibility to our clients. But we boldly do more—we are financial stewards.

Our first priority is to apply our passion and discipline to protect your long-term interests, not merely to demonstrate that we act in your best interest. Our work has a higher sense of purpose.

As financial stewards, we are committed to being a point of inspiration for moral, ethical and prudent decision-making. An investment fiduciary can ignore morality and ethics, and still serve as a fiduciary.

brainA financial steward must be able to judge wisely and objectively, while a fiduciary needs only to confirm to a uniform fiduciary standard. We believe that there’s a wide gap between being qualified to guide a client toward good decisions, and being competent to stand up for and speak out about unethical or illegal behavior.

Financial stewardship is a voluntary standard that is not subject to legal or regulatory oversight. Unlike a fiduciary, we don’t have to wait for regulators to define the standard of care for a financial steward.

The concept of fiduciary responsibility is processed in the neo-cortex portion of the brain involved in sensory perception, cognition, motor commands, reasoning and language. Stewards operate there too, but prioritize their thinking in the emotions of love, passion, trust and security, the limbic portion of the brain.

Our clients tend not to define their wealth in terms of cash, securities, real estate, business, cars or jewelry. While they may possess these things, they are not what makes their lives truly satisfying or happy. Victor Frankl, psychiatrist, Holocaust survivor and author of Man’s Search for Meaning presents a theory that our primary drive in life is not toward pleasure and power, but toward the discovery and pursuit of what we personally find meaningful. As good stewards, we help our clients identify the personal aspect of their wealth and to help them make a difference within the institutions and causes they care about.

The Joy of Stewardship

After taking a look at the financial state of Americans, we were moved to reflect on the biblical passage that was literally the foundation of the Stewardship Foundation—the story of the good and faithful servant in Matthew’s Parable of the Talents.

money-card-business-credit-card-50987The average American gross income is currently $71,258. That seems like good news until we realize that the average American household with a mortgage and other loans is $132,539 in debt, including an average $16,061 on credit cards.

According to IRS data for 2015, only 30% of Americans claim a charitable contribution deduction on their taxes. We might assume that some who didn’t itemize their deductions also gave, simply because Americans are generous to those less fortunate.

It’s good to remind our younger generation that they should carefully choose how they give. For example, only donations to qualified charitable organizations are deductible. If you’re not sure, we can verify this for you, or you can search for a charity on a site like Charity Navigator.

While handouts to the homeless or contributions to GoFundMe are worthy acts of charity, these are considered “personal gifts” and are not deductible. You may remember the 2015 news story about Casey Charf. While being treated in the hospital for a car accident, Casey’s doctors found she had a rare, seemingly incurable cancer requiring immediate treatment. The $50,000 she and her sister raised on GoFundMe triggered a $19,000 bill from the IRS.

When you give, keep receipts, even for cash. The same applies for payroll deductions should your employer run a charitable giving campaign. Remember too that if you receive something in exchange for your donation, whether a basket of goodies at a silent auction or a t-shirt, you have to deduct the fair market value of the incentive gift.

One of the most important charitable avenues often overlooked is giving appreciated assets. Donating property that has appreciated in value, like stock, can be highly beneficial. Call us if you want to explore how to receive a double benefit from donations of appreciated assets.

Do either our giving patterns or our own money problems, real or perceived, prevent us from remembering whose resources we’re managing? Are not our time, talents, skills, and health all tools to help us share with others, do good for others, and use them to glorify God? We exist to help others find the joy in stewardship in practical, financially beneficial ways, but also because it’s our credo and commitment to God.

Don’t Give to Charity, Grant to Charity

thank-you basketMost Americans are generous. We support our churches and step up to the plate during times of natural disasters. We give to United Way at work, donate goods and cash to the Salvation Army, and many respond to televised pleas for support especially when it involved children or pets. Americans have big hearts, and giving makes us feel good. It also allows for a break on our tax return!

But do you give strategically? Have you taken the time to think through how you can best help the causes you care most about? Giving strategically means “giving with goals in mind”—a way to support a charity, or several charities, that you love.

A Donor-Advised Fund (DAF) is a charitable account that acts as a charitable savings account. You make an initial deposit that is immediately tax-deductible, then use it to make grants out to qualified 501(c)(3) charities when you wish. The magic of grants is that you can specify how you want your money to be used by the charity.

You may be able to give more than you think! You can fund your DAF account with cash; that’s better than having it taxed. Yet you can increase your giving by putting to work your non-cash assets like stocks, real estate, IRAs, whole life insurance policies, art collections, and other tangible personal property. You keep your assets in the family, and allow their value to help others during your lifetime!

There are legitimate reasons to keep your giving private. We find that some business owners with staunch moral convictions prefer to keep information about which charities they support private. Unlike giving from a private foundation, a DAF allows them to increase their giving capacity at a fraction of the cost, without all the legal, tax and regulatory burdens, and never having detailed tax records made public.

If a strategic giving plan sounds interesting and solves some organizational, administrative, or privacy issues for you, call me today at (614) 800-7985 or reply to this email. And please, share this blog from Stewardship Foundation with someone you know. Together, we can make the world a better place.