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SYNOPSIS OF WEALTHY AND WISE
By Claude Rosenberg
Page 2 of 7
Estimating a Gift as a Percentage of Assets

• For average filers earning $200,000-$500,000 in adjusted gross income, we have assumed an affordable donation equal to three quarters of one percent of assets, which after tax savings, comes to an estimated out-of-pocket cost of $7,000 on assets of $1 million.

• For filers earning $500,000-$1,000,000 in AGI, the suggested donation totals 1 percent of assets, or an estimated out-of-pocket cost of $28,500 on assets of $2.8 million.

• For filers earning $1 million or more in AGI, the suggested donation is 3 percent of assets, or an estimated out-of-pocket cost of $376,000 on assets of $12.6 million.

See Table 1., “Affordable Donations in the 2001 Downturn”

A Way To Run Your Own Numbers
No matter what your income or asset level, if you wish to explore affordable giving in a more detailed and customized fashion, to reiterate, you can use PrudentPal^TM Charitable Giving Calculator, on-line at http://www.newtithing.org (organizations can also license this tool for posting their web sites. PrudentPal^TM allows you to budget for comfortably affordable donations to charity based on annual surplus income and the market value, after debt, of investment assets (excluding personal housing). You can explore an array of giving scenarios, based on your personal finances, needs, and projections. Data based on historical averages provide conservative estimates for entries you can’t answer. Help buttons supplement the tool itself with an introduction to the tax and financial htmlects of philanthropic planning.

What If Disaster Strikes_ Won’t You Regret Donating Anything_
If you were to sustain a drastic financial loss – say 90 percent of your investment assets – I can’t guarantee that you won’t be sorry about many things. But your charitable contributions probably won’t be one of them. To illustrate this, compare two individuals with initially identical financial profiles (see Table 2). One of them, the "Donor," makes a charitable gift that costs $50,000 after the tax deduction, while the other, the "Non-Donor," gives nothing.

Table 2. Charitable Contributions & Drastic Financial Loss

TABLE 2 Charitable Contributions and Drastic Financial Loss NewTithing Group, http://www.newtithing.org

	Donor	Non-Donor
Original Investment Assets	$1 million	$1 million
Less Donation after tax savings	50,000	- 0 -
Investment Assets before loss	950,000	1 million
Less 90 percent loss	(855,000)	(900,000)
Remaining investment assets	$95,000	$100,000

After viewing the table, note the tiny difference in remaining investment assets between “donor” and “non-donor” after the loss – just $5,000, a miniscule 1/2 of 1% of original investment assets and approximately 5% of the remaining sum after the loss. Clearly, the charitable gift is neither the culprit of financial loss, nor the straw that breaks the camel’s back.

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