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Paying it forward:
how to leave a charitable legacy
‘What counts in life is not the mere fact that we have lived. It is what difference we have made to the lives of others that will determine the significance of the life we lead.’ With these words by the late Nelson Mandela top of mind as we commemorated Mandela Day last month, you may be wondering how you can turn 67 minutes into something more lasting – for the benefit of our planet and its inhabitants for years to come. More importantly, how can your family ensure a charitable legacy that can last over generations?
Studies have shown that by activating the reward centre in our brains, giving to others makes us happier human beings. Acts of kindness make a difference not only to the lives of those less fortunate and their communities, but also to the health and well-being of the giver – especially when nothing is expected in return.
In 2010, around 200 of the world’s wealthiest individuals signed the Giving Pledge – a commitment to dedicate the majority of their wealth to giving back. Names like Richard Branson, Warren Buffett, Ray Dalio, Bill Gates, Elon Musk, Mark Zuckerberg and our own Patrice Motsepe are on this list. Pledgers range in age from 30 to 90, are from 23 countries and give to a wide range of causes.
Governments around the world support giving by granting tax breaks on donations to recognised charitable institutions or activities (see our earlier article on the tax benefits of charitable giving).
But many people plan to give away some of their wealth only after they die – by way of bequests from their estates. There could be several reasons for this:
Others are taking philanthropy to the next level during their own lifetimes, however – the 2019 Knight Frank Wealth Report refers to wealthy, conservation-minded individuals using their resources to protect precious habitats on our planet, as the ‘ultimate investment of passion’. The report states that ‘when it comes to philanthropy, environmental causes are becoming increasingly popular’, with some donating more than just money by taking a hands-on approach, giving their time and effort to the causes in which they believe.
Whether by way of bequests in a will, or via philanthropic endeavours during their lifetimes, wealthy families are increasingly looking to leave a charitable legacy that can last over generations. The first step in achieving this is deciding how and to which cause you want to contribute – do you want to conserve our planet’s natural resources or make a difference to the environment? Do you want to provide more employment to people through your business? Or are educational projects close to your heart? You’ll also need to consider your level of involvement – do you just want to donate, or ‘get your hands dirty’ as well?
It’s crucial to get the whole family on board. Everyone, especially the next generation, needs to buy into an agreed set of family values, as well as the legacy by which the family wants to be remembered. One of the best ways of facilitating this is by developing a family charter, which should include the traditions and values of the family, its attitude to philanthropy, and the type of projects to which the family wishes to contribute.
It’s also important to consider the tax consequences of donating to different kinds of non-profit entities recognised in South Africa. For example, donations made to registered public benefit organisations that comply with Section 18A of the Income Tax Act can be claimed as tax deductions by the donor up to certain limits. It’s best to obtain expert advice to ensure you maximise the tax benefits available when you consider your charitable giving plan.
‘Sometimes, it falls upon a generation to be great. You can be that great generation. Let your greatness blossom.’ – Nelson Mandela
If you’d like assistance in facilitating a family discussion around the various aspects of giving and creating lasting legacies, setting up a charitable giving programme for yourself or your family, advice on the different charitable causes available, or the tax implications of charitable giving, please contact Marteen Michau at marteenm@privatewealth.sanlam.co.za.
The formation and registration of trusts, and the provision of independent trusteeships – both local and offshore.
The creation of BEE, charitable, special and Shariah trusts compliant with regulatory and legislative requirements.
The administration of deceased estates in South Africa and abroad.
Advice on complex structures, asset restructuring and bequests in foreign jurisdictions.
Advice on emigration and immigration, foreign earnings and the application of any double taxation agreements.
Updating trust deeds to ensure they’re in line with the latest changes in the trust environment.
Updating and/or drafting of wills dealing with South African and/or foreign assets.
Advice on the establishment and management of charitable organisations, their tax status and tax deductible donations.
Advice on the potential tax consequences and reporting obligations if you hold a US passport or green card, or if you have children living in the US.
Guidance on the financial implications of life-changing events, such as getting married, divorce or the birth of a child.
Expert advice is crucial in dealing with cross-border estate and tax planning.
Stanley Broun has spent 13 years in Fiduciary And Tax.
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