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of the children now sit on the board of Buffett's foundation, and trustees are designated $20,000 apiece every year to direct to projects of their own choice that fit within the broader mission of the foundation. T aking a f lexible strategy with the legal and financial compo- nents of philanthropic giving is as essential as when dealing with generational differences. For decades the family foun- dation has been the default-giving vehicle. While foundations allow a family unlimited, multigenerational control over grant making, the tax deductions for contributions are less generous than for other vehicles, such as donor-advised funds. (For instance, if donating company stock, family members can deduct its cost; if they are donating to a donor-advised fund, they can deduct the often significantly higher fair market value of those securities.) By some estimates, 70 percent of all foun- dations have assets of less than $1 million, a level that most experts consider to be inefficient. Michael Cole, president of Ascent Private Capital Management, says that while a foundation—which requires its members to keep tabs of investments, governance, and taxes as well as evaluating and monitoring grants—can be "a great financial parenting and educational tool," unless a family has or plans to donate more than $10 million to the foundation, the administrative costs are too high to justify this option. The other most popular vehicle is the donor-advised fund, established under the umbrella of sponsoring organizations, such as community foun- dations. In recent years a range of nonprofits and special divisions of banks and investment companies like Fidelity have offered opportunities for families to establish their own DAFs. However, there are more con- straints: Donors can only suggest or advise, rather than dictate, where they want grants to go; and children who serve as advisors cannot earn a salary for doing so. But for a growing number of families, the lower overhead costs, higher tax deductions, and the increasing ability to bring in children or grandchildren as "co-advisors" are outweighing some of the disadvantages. While families might want to ponder the tax considerations associated with various philanthropic vehicles, the decision about whether or not to be philanthropic is almost never made for financial reasons. "The tax breaks you get for charitable giving are no greater than those you get for losing money in the stock market, and nobody invests in stocks with the intent of losing money," points out Ramsay Slugg, wealth strategies advi- sor at US Trust. For Howard Buffett, the biggest challenge for philanthropists isn't whether to set up a foundation or DAF. "The worst thing you can do is to live in your comfort zone," he says. In the late 1980s, Buffett and his sib- lings were each allowed to determine the target(s) of $100,000 per year from their parents' new foundation. In 1999, each of the siblings received $26.5 million from their parents to start their individual foundations. "Hey, many of my ideas were stupid," he admits, recalling the notion of funding a camel dairy for Western Sahara refugees. "You learn fast to think hard about what to support, but at least the mistakes were small, while the lessons were big." Nonetheless he encourages his children to ven- ture into new areas. "I can be a bit of a dictator, but I know that it's important for the next generation to challenge me, to have someone with a view that's a little less myopic ask me tough questions. These are the forma- tive experiences that they'll be putting in their memory banks and drawing on in the decades to come." V Saving Grace Tax incentives lure philanthropically-minded Californians to Nevada. Tax laws don'T necessarily Turn casual donors into bona fide philanthropists, but that doesn't mean that they don't have an impact on the level of philanthropic giving, as Vegas-area nonprofits are starting to recognize. In November 2012, Californian residents gave the thumbs up to Proposition 30, which boosts taxes on earnings of more than $250,000 for individuals and $500,000 for couples through 2019. On top of the fact that California's state capital gains tax is the highest in the nation, at an eye-popping 13.3 percent, that was the last straw for many wealthy families in the state, says Christopher Pitzak, principal at Bernstein Global Wealth Management in San Diego. "I'm having discussions with my clients almost on a daily basis about moving to the Las Vegas area and its surrounding region," he says. The impact on philanthropy? Charitably minded donors can only give away what they are able to keep out of the hands of the taxman, points out Pitzak. "One of my clients would have paid $22 million in taxes had he stayed put in California, but after moving to Nevada, he paid zero" since Nevada has no personal income tax, Pitzak says. The entire savings, he adds, has been allocated to philanthropic giving. The odds are that these donors would have been philanthropically minded wherever they lived. But relocating to Nevada has not only freed up more resources, it's created the opportunity for Vegas-area organizations to reap a coveted portion of those extra philanthropic dollars, Pitzak argues. And that could only increase with time. That elusive phenomenon known as "donor engagement"—the willingness of a philanthropist to not only write a check but to become actively involved with the work of an organization they are supporting, and mobilize other donors in their turn—is rising, according to reports from the Nevada Community Foundation. The trend is in its early stages, but Pitzak sees no reason why it shouldn't continue to benefit Vegas-area philanthropic giving, just as it's proving to be a windfall for Vegas- area realtors. "It's a great side effect of the Californian flight to avoid taxes." vegasmagazine.com 129 126-129_V_FEAT_Philanthropy_Spring14.indd 129 2/11/14 3:56 PM