Aspen Peak - Niche Media - Aspen living at its peak
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want to transfer the knowledge and sense of commitment to my children," which includes his wife's four daughters, whom Buffett has helped raise, along with his son, Howard Warren Buffett. At the same time, he adds, "I don't want that to stop me from doing the biggest things that I can today. I'm going to put all my time and resources into addressing these issues." Buffett said his son had visited 58 countries by the time he went to college— and "our destinations weren't places like Paris and Cancún." Three of the children now sit on the board of Buffett's foundation, and trustees are desig- nated $20,000 apiece every year to direct to projects of their own choices 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 founda- tion 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 foundations have assets of less than $1 million, a level that most experts consider to be ineffi- cient. Michael Cole, president of Ascent Private Capital Management, says that while a foundation—which requires its members to keep tabs of invest- ments, 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 founda- tions. 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 constraints: 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-advi- sors" 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 philan- thropic 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 advisor 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 siblings were each allowed to determine the target(s) of $100,000 per year for their parents' new foundation. In 1999, each of the children received $26.5 million from them 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 refu- gees. "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 venture 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 formative experiences that they'll be putting in their memory banks and drawing on in the decades to come." AP The Grandeur of the Landscape Colorado legislators push forward with aggressive financial incentives to protect land from overdevelopment. Given All the nAturAl wonders of Aspen, it's not surprising that it's home to the Aspen Center for Environmental Studies, that it's a hub for environmental activism, and that Colorado as a whole is the base to some 125 nonprofits and charities with missions such as promoting solar energy and cleaning up the water supply. Colorado is also home to a unique state program that enables landowners to swap easements (a legal agreement limiting the use of the land) with the government for tax credits, to restrict development on this newly protected land. "We see this in ranches, in areas where there are animal migration paths or scenic vistas, and where future development might be economically valuable but would have an environmental cost," explains Scott Winget, senior managing director and head of Wealth Impact Planning at Ascent Private Capital Management in Denver. Winget has helped facilitate such transactions for Colorado families and says working with groups like the Aspen Valley Land Trust can help landowners protect their land while maximizing the financial benefit of signing away the development rights—benefits that can include both a state tax credit, valued up to $375,000, and a federal tax deduction. Hedge fund billionaire Louis Bacon has used other conservation easement programs, in partnership with the US Fish and Wildlife Service, to protect some 170,000 acres of the land he owns in southern Colorado, creating the Sangre de Cristo Conservation Area. That marks the largest such donation to the Fish and Wildlife Service ever recorded. While some question the level of altruism behind this legislation, for now it still looks like a win-win for those with vast horizons and the yearning to preserve the precious land for future generations. aspenpeak-magazine.com 173 170-173_AP_F_Philanthropy_SUM_FALL_14.indd 173 5/6/14 2:25 PM