Family Foundation? Not Just For the Rockefeller Types!

You pride yourself in your work, earn a good income, buy a home, maybe have some kids and help them through school, maybe buy a cottage, save for retirement, reach retirement.

✅Home

✅Cottage

✅School

✅Retirement

All of life’s boxes checked right?

Perhaps, but what if you were so good at achieving those goals that you have plenty left over and no new goals to achieve? Smaller goals may pop up. You might consider going on more trips than you thought, buying the nice car you always wanted but never pulled the trigger on, helping your kids buy homes or pay for weddings, or giving more to charities. While these are all worthy uses for your money, they tend to pop up every now and then and the cost is generally far lower than the four big financial goals check marked above. As we age, and have achieved nearly all we could imagine achieving, we discover a new goal that we rarely gave any thought to…

Whoops. Let’s try that again!

Legacy goes beyond charitable contributions or leaving money for your kids, grandkids and other beneficiaries. It reflects your contributions to society and your values and beliefs and is first established by living a virtuous life. A strong legacy leaves a lasting impression on the world and continues when you’ve left this world.

Creating a legacy starts with you living a great life and instilling your values and beliefs in others through your day-to-day actions. Sometimes it is as easy as you being you! Maintaining your legacy when you’re gone is the hard part. What tools are available to individuals/families who wish to help build and maintain a long-lasting legacy?

Family foundations are a common way to sustain a long-lasting legacy. These foundations are established by a family, funded with family assets and most typically managed by family members. They serve as a conduit for charitable giving and help families align their philanthropic values across generations. Values and beliefs embraced by the matriarch and/or patriarch can be broadcast by the foundation via charitable contributions and the works that the foundation, and its people, pursue. Involving family members in the charitable contribution decision-making and charitable works helps reinforce family unity and help guide younger family members now and when the matriarch and/or patriarch pass away.

What is the cost of such a foundation? Annual overhead costs to run a small private family foundation can amount to tens of thousands per year before considering any staffing or office expenses. These expenses can make establishing a family foundation cost prohibitive for many families.

What option is available to high-net-worth families who aren’t quite at the Rockefeller level?

A charitable giving fund (CGF), formerly known as a donor advised fund (DAF), allows the donor to donate a significant amount to a charitable account that is managed by his/her investment advisor and benefit from the tax-deductible charitable contribution. Using the CGF as a source of funds, the donor directs donations to their charities of choice in future years.

Many families use this structure as a mini-family foundation and involve family members and/or friends in the donation decision-making process. While administration costs associated with traditional family foundations can reach tens, if not hundreds of thousands of dollars per year, these CGFs only charge a 1% administration fee in addition to the investment management fee established with your investment advisor.

CGFs:
    ➢ Help create a legacy for future generations to remain involved in your philanthropy,
    ➢ Teach the lessons associated with philanthropy, even after you have passed,
    ➢ At no initial cost to establish the account and with relatively low management and administration fees once
         established.

While creating a CGF may not be a top priority at the current time, it is something to consider as you age and your planning priorities shift from preparing for retirement to transferring wealth to future generations and establishing a long-lasting legacy.

The Raymond James Canada Foundation was established in 2012 and administers CGFs at Raymond James Ltd. Across Canada, Raymond James advisors manage more than 100 charitable giving funds on behalf of charities and donors, including more than 10 foundation clients in Waterloo.

If you wish to learn more about CGFs and how they can help you establish a cost-effective family foundation, reach out to us at Steele Wealth Management.

Steele Wealth Management - Building an Enduring Plan for a Lasting Legacy

Raymond James Canada Foundation

News and our views

Following Sizeable Revisions in U.S. Non-Farm Payrolls, North American Jobs Picture Is Uglier Than Thought. U.S. non-farm payrolls data for the month of July showed that the U.S. economy added only 73,000 jobs during the month, below the expectation of 100,000. This miss relative to expectations was not significant but the downward revision for the months of May and June totaling 258,000 jobs, which caused the unemployment rate to rise to 4.2%, was enough to raise some eyebrows about the state of the U.S. economy. The revisions to non-farm payrolls were extreme enough to incite U.S. President Trump to fire the head of the U.S. Bureau of Labor Statistics after accusing the department of releasing fraudulent numbers. Stock markets and bond yields fell in reaction to the news as investors priced in higher odds of a U.S. recession. Following these revisions, the U.S. economy has only created ~35,000 jobs per month from May to July. The change in Canadian employment has also been weak with the Canadian economy shedding 40,800 jobs in July and creating only 4,500 jobs per month from February to July, similar per capita employment gains as the U.S. economy.

Our Take: Recessions often begin when the 3-month rolling average of U.S. non-farm payrolls approach zero and subsequently turns negative (as seen below). That said, it is important to remember that nearly all businesses have been adjusting to trade uncertainty and higher tariffs so we may simply be seeing a pause in hiring until businesses have more certainty about future demand and corresponding labour needs. Notably, another U.S. labour sector datapoint, weekly jobless claims, which can also be an early recession indicator, remain near cycle lows and are not signaling any labour market distress. Either way, whether trade deals are finalized in the coming months or higher tariff rates are made (semi-) permanent, there may be pent up demand for hiring once some form of normalcy is achieved.

U.S. Non-Farm Payrolls (3-Month Rolling Average)

Just for fun

• Join us in congratulating Steele Wealth Management’s Liam Priestman in achieving the Certified Financial Planner (CFP) designation! The CFP is recognized as the gold standard in financial planning worldwide. We are excited for Liam to use his financial planning education and experience to better enhance our clients’ wealth management plans and keep clients on track for decades to come.
• Canada has a new star tennis player! At just age 18, Victoria Mboko became just the third Canadian woman to win the Canadian Open and the first to do it in Montreal. Victoria rose 64 spots in the World Tennis Association singles ranking, from #85 to #24, as a result of the tournament victory. This makes her the second highest ranked player under age 20 in the world. Canada has yet to claim an Olympic medal in singles tennis, but we appear to have a contender in waiting…
• The largest Martian meteorite, discovered in 2023, was auctioned by Sotheby’s New York for US$4.3 million, and US$5.3 million after fees and other costs. The meteorite was previously on exhibit at the Italian Space Agency in Rome and at a private gallery in Arezzo, Italy, in Tuscany. Is buying this rock a bet on humanity’s inability to reach and extract resources from the Red Planet? What happens to the price of this rock if humanity can access Martian rocks at will?!?