TEAM MODERNIST ON Charitable Giving, MF Feedback, Midnight Oil and Rebalancing


Happy new year! Here’s to a joyous and fulfilling year, rich in connection and beauty.

Last month we talked about supporting personal values through our investment choices. This month we are diving into the most direct way to support our ideals: charitable giving.

Building a values-based business

In gratitude for our success in 2016, Modernist donated 3% of our net profit to charitable organizations. We aim to do the same in 2017.

We would love your help as we continue growing a firm grounded in our core values:

Invite & Include, Invest in People, Innovate & Iterate, Do Good Work & Do it Well.

Please email us and share your ideas on how we can further embody our values as a wealth management firm!

We look forward to learning from you.

Nerds of note on philanthropy

Charitable giving is an important part of the financial planning process, as far as Modernist is concerned. Most people write a few checks throughout the year, usually when prompted by an ask or political event. Not surprisingly, we think it is better to have a plan. We suggest creating a mission statement for giving that includes core values, desired impact, specific causes, and annual dollar amount.

To help you out*, we consulted the book So You Want to be a Philanthropist by Julia A. Kittross, a Pacific Northwest philanthropic expert.  Below are some major takeaways:

  • If ease and tax planning are most important to you, checkbook giving provides a lot of flexibility. You also have the option of recurring monthly contributions, which can help your favorite nonprofits manage their budget.
  • If you would like to donate more than the occasional check, donor advised funds can help you reap the benefits of the tax code while maintaining flexibility, functioning like a mini-foundation. You deduct the donation upfront, then make grant decisions later. We often help our clients set these up in order to create structured giving, engage kids or parents in philanthropy, or to manage the tax bill when selling a business or property. To set up a donor advised fund, you can reach out to your investment advisor or a community foundation, like our friends at OCF.
  • If you want to leave a legacy, but don’t need to see the impact in your lifetime, you can create a bequest by writing charitable beneficiaries into your will or designating them on your investment accounts and insurance policies.
  • If you want greater impact by pooling your funds, you can join or start a giving circle.  These groups support connection in their communities while collaboratively selecting their beneficiary organizations. Usually, the members share a meal or glass of wine and simply write a check.
  • If you want to donate significant resources (usually at least $5,000,000 and a lot of time), you may consider a private operating foundation. To set up one of these complex structures, you will work with a lawyer, CPA, financial planner and others who have expertise in the field of private philanthropy.

Phew – that’s a lot of information! If you would like more, you should definitely check out the full book or peruse the resources at Grantmakers of Oregon and SW Washington.

*Please contact your tax advisor for a recommendation suited to your individual situation.

Songs that are really about giving back

Here’s a flash-back to the 1987 anthem “Beds are Burning” by the Australian band Midnight Oil. The song was written to pressure their government to give lands back to native populations. Sadly, this is still an important issue around the world, but we think the lyrics also hold a broader message about the responsibility of wealth. As they sing, “the time has come, to say fair’s fair. To pay the rent, to pay our share.” The video also has some excellent ‘80s fashion and dance moves…

Portfolio perspectives on buying low, selling high

The beginning of a new year feels like a great time to reset and refresh by setting resolutions, cleaning out your closet or jump-starting your gym routine. If you are managing your own investments, add to that list rebalancing your portfolio allocation.

“Rebalancing” means placing trades to bring your investment portfolio back to its initial allocation, as market movements will inevitably cause drift during the year. For example, if you started the year with a moderate 65% stock/35% bond allocation, you might realign your portfolio by selling some stock that did great in 2016. We monitor our portfolios quarterly for rebalancing, but if you’re DIYing it, once per year is a suggested minimum. If this sounds counterintuitive (wouldn’t you want to keep the things that did well?) check out this quick explainer from our Investment Committee on its impact on investment returns.