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• • . oar commen s Be o om ea ers i
P;
l ,,aewmer Jew,sn endorses plans for assisted living complex,
'1 m- -- • _ oard of Directors of the
Foundation News United Jewish Federation of Tide-
water recently commended the
The Impact of Stock Market Volatility
On Charitable Gift Planning
By Beth A. Berk, CPA
Director of Gift Planning
ith the roller coaster activity sus-
tained by the stock market in the
past several months, one might
expect some investors, especially those at or
near retirement age, to be reconsidering their
level of commitment to a market experiencing
this kind of volatility. But news reports indi-
cate that the ups and downs of the market
have yet to shake the confidence level of most
investors. Apparently both long-term and
Beth A. Berk novice investors recognize that markets will
invmiably go up and down. In addition, many
investors recognize that short-term downward fluctuations may
even provide opportunities to buy additional stocks at a discount.
Stocks fuel record giving
According to the Giving USA report on charitable giving in
America in 1997, gifts of appreciated securities were one of the
prime reasons that charitable giving reached an all-time high last
year. If me current atmosphere of uncertainty and volatility sur-
rounding equity markets continues this fall, what impact might we
expect on charitable giving, and what strategies may be beneficial
to planned and major gift prospects in the coming months?
Cashing out of the market
First, those who decide to reduce their exposure in the stock
market this fall may well find that they have significant amounts
of cash on hand as they take their profits, arid in some cases losses,
in the market. Some will reinvest in other securities, but many
will place their cash 'ton the sidelines." For these persons, 1998
may be an excellent time to use some of their gains from the long
bull market to complete outstanding pledges and otherwise make
larger than usual charitable gifts in 1998.
, For the higher income donor, selling off a portion of his or her
portfolio may also make it possible to give more this year from a
tax standpoint. Because percentage limitations (50% for cash and
30% for securities) are based on AGI (adjusted gross income), as
securities are sold and more AGI is generated, it becomes,possible
to deduct larger amounts that might otherwise have needed to be
carried over to future years.
There are, however, much more efficient ways to combine
charitable giving with the realignment of investment portfolios.
Three alternatives
We start with the fact that there are really only three possible
scenarios tbr the investment markets-they can go up, go down, or
trade at current levels. Each of these different scenarios provides
planning strategies that can help our donors meet both personal
and philanthropic objectives with gifts of appreciated securities.
If a donor believes that the market is headed downward, one
strategy Would be to make charitable gifts with appreciated securi-
ties and to conserve cash. This strategy would allow the donor to
fulfill charitable obligations with "paper profits" that the donor
thinks could be eroded by a decrease in the market while, at the
same time, preserving cash for other purposes. The donor enjoys a
federal and state income tax deduction based on the full value of
the donated property, and capital gains tax is bypassed entirely.
If a donor is uncertain as to whether the market will continue to
go up or down, we might suggest that, instead of giving cash, he or
she consider making outright gifts using appreciated securities.
Then the donor can use the cash that might otherwise have been
donated to repurchase additional shares of the same stock at
today's value. That way, if investments lose value in a market cor-
rection, the donor will have a capital loss to declare for tax purpos-
es. On the other hand, if the markets go up, the donor will enjoy a
new, higher cost basis in the stock that "replaced" the donated
stock.
If our donor would simply like to reduce his or her position in
the market, the donor may want to consider a combination of giv-
ing some shares of a stock and selling the remaining shares. This
is called a "balanced sale" of the stock.
CONTINUED ON PAGE 18 '
leadership of Beth Sholom Home
of Eastern Virginia for its strategic
planning efforts for their proposed
assisted living complex in Virginia
Beach.
Assisted living services pro-
vide support for the basic activi-
ties of daily life for the elderly
which includes bathing and
grooming, personal hygiene, med-
ication reminders, housekeeping,
three congregate meals a day and
transportation, while allowing the
residents to enjoy all the warmth
and amenities of independent liv-
ing without the worries of mainte-
nance and upkeep.
Plans for the complex, which
will be constructed on land adja:
cent to the Home, were presented
at the Board Meeting by Brian
Mesh, Executive Vice President of
BSH, and I. William Berger, Pres-
ident of the Home. Brenda Klar.
immediate past President of the
Home, was also among the pre-
senters. The meeting was held at
the Hebrew Academy of Tidewa-
ter in September.
"There is still 'much work
ahead in seeing the assisted living
facility to fruition, and support
from the community in serving on
the finance, building, interior
design and other committees is
crucial to the completion of this
project," Berger added.
David Brand, President of the
UJFT, noted that the presentation.
which was also made earlier to the
Executive Committee, was very
well received and that it was the
opinion of the committee that
BSHEV leadership had the project
well in hand.
The assisted living complex
was endorsed by the UJFT Board
of Directors which will work
together with Beth Sholom Home
of Eastern Virginia in zoning and
bond financing for the 67-bed, pri-
vate pay facility. As explained by
Mark Goldstein, Executive Vice
President of UJFT, "the complex
will not create a financial burden
on the community; it will be man-
aged without community subven-
tion."
Although still in concept/appli-
cation stage, its inception is based
on the need for such a facility in
Tidewater for the growing number
elderly Jewish people who are
seeking this service and who
would be more comfortable in a
Brian Mesh, left, and Bill Berger show UJFT board members plans for
the assisted living complex. At far right is Rabbi Elliot Marmon of Temple
Emanuel.
Jewish facility, as opposed to a
generic facility owned by a la,arge-
for profit company, Goldstein
explained. The assisted living
facility on the cmnpus of BSHEV
will assure that kosher dietary
laws are met and Jewish environ-
ment is maintained.
The concept of assisted living
is dedicated to preserving a sense
of personal dignity, choice and
self reliance, and as Brenda Klar
notes: "The building of an assisted
living facility is the culminatmns
of the past two years work of the
board and community members.
Many meetings, focus groups and
discussions have taken place to Brenda Klar shares her Insight
assure the building of this state of into the assisted living complex
the art facility." with board members.
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