Description
Welcome to the AFB Possibilities Podcast. In this first episode of the newly rebranded podcast from the American Foundation for the Blind (AFB), we wanted to share with you a special interview during this season of giving with AFB trustee Ted Francavilla and financial advisor Liz Updike.
The AFB Possibilities Podcast is a production of the American Foundation for the blind. Previously the Inform and Connect Podcast, we take a deep dive into life, culture, and happenings for those experiencing blindness and low-vision. Melody Goodspeed is the host. And with her faithful guide dog Barney by her side, they travel the country, both literally and virtually, capturing the stories and experiences from the blind and low-vision community.
Ted Francavilla has been an active member of the AFB Board of Trustees, shepherding AFB's finances over the years. A retired senior executive with JPMorgan Chase, he's been a passionate advocate for people who are blind or have low vision over the decades, and he recognizes the importance that donors play toward making nonprofit missions move forward. Elizabeth Updike has over 40 years in the business of financial planning and wealth management. Together, she and Ted share best practices and advice for those of retirement age on how they can give smartly and make their money last longer.
Like this program? Please like and subscribe, and even consider making a donation to support our work expanding opportunity and creating a world of endless possibilities for people who are blind or have low vision.
Questions or comments? Email us at communications@afb.org.
AFB Possibilities Podcast, Episode 1 Transcript
AFB Tagline
Announcer:
You're listening to AFB Possibilities, a production of the American Foundation for the Blind. On today's episode, we welcome Ted Francavilla and Liz Updike as we look ahead to the giving season and discuss smart ways we all can give. And now your host, Melody Goodspeed.
Melody Goodspeed:
Hey, everybody. Welcome to the Possibilities podcast at the American Foundation for the Blind. I am so excited to be here with you today and we are going to talk a lot about just a lot of good things that we're doing here at AFB and especially with educating on a huge topic that I really feel is really beneficial on noncash and smart giving. And so here with us today, we have two wonderful people that are going to educate us and have some fun with us today. So first, I want to introduce Ted Francavilla, who is a AFB trustee and friend of AFB for so long. Ted, how are you doing today?
Ted Francavilla:
Very good, Melody. Happy to be here.
Melody Goodspeed:
I'm so glad to have you here and we also have our new friend with us, Liz Updike. Liz is in the Northern Virginia area and she's here with us today and we're going to have a great talk about all of the fun things that she does, too. Liz, thanks for being here with us today.
Liz Updike:
Oh, it's my pleasure and I'm very excited about the podcast today and being with you all today.
Melody Goodspeed:
Liz, I'm going to go ahead and start with you. Can you tell us a little bit about your background and your passions and anything you'd like to share with us today?
Liz Updike:
Yes. Well, my background is 40 years in the investment and wealth management area of financial services. I have my own practice in Northern Virginia with Osaic Wealth Management and basically the practice is a boutique practice that is designed to provide clients with professional as well as personal wealth management and financial planning services. We work very hard, me and my team, to empower our clients who are business owners, federal employees, highly compensated executive high net worth families, foundations, endowments, and independent professionals as they work to achieve financial independence and success with their financial plan. I work here in Northern Virginia. My office is in Vienna. However, I do have clients all over the United States in New York and California, Texas, Illinois, North Carolina, Tennessee, Florida, Arizona, so many different states. We reach clients and work with clients that engage with clients.
My passion, I would have to say, are twofold. I have two beautiful daughters who are both adopted. My oldest, Olivia, is adopted from Cambodia and my youngest, Amelia, was adopted from Vietnam. And we, as a family, created a foundation to build schools in Cambodia to help educate the children in the very poor villages and we have built four Olivia schools. I also serve my community with children's charities and was a board member and an advisory board member for Devotion to Children charity for about 12 years. I serve in my church. I founded the endowment and also the investment committee. I really am grateful for all that has been given to me and I do my best to give back in service to others.
Melody Goodspeed:
Thank you so much, Liz. That is really incredible and thank you for all that you do for the finance world and giving back because it's so important. I think that no matter who we are, we all have that ability and I thank you so much for being here and sharing with us today some really good stuff. Speaking of good stuff, too, Ted, could you tell us a little bit about you? You have such a very robust background, too, and I'm super excited to have you here.
Ted Francavilla:
Thanks, Melody. Happy to be here as well. So most of my career was in the financial services world at JPMorgan Chase and predecessor banks, as we say, going all the way back to manufacturers, Hanover for mergers earlier. And I ... Most of those years were serving as the CFO and related positions for the retail consumer banking side of the organization. So those were interesting years to be in the banking world. Then I did consulting to regional banks for about four years and then I've been in the nonprofit world for the last 15 years or so, three years working and also on the board at the New York Lighthouse for the Blind, six years as the CFO of Concordia College where got to see the workings of the higher education world.
And now I'm in my 13th year as a board member here at the American Foundation for the Blind, a great place to be. I love serving here. I chair the finance and investment committee of the board. I have two beautiful children in their 20s and, like Liz, one of my two children is adopted domestically from the state of Louisiana, big advocate of adoption. And so my wife and I live in New Rochelle again, especially this time of life, spending time giving back because we've been blessed for so many years. So happy to be here, Melody.
Melody Goodspeed:
Oh, thank you so much and thank you for your service to AFB. I think one of the things with our mission is, really, we've got so many different programs and our mission of really changing the way the world sees blindness. Ted, can you tell me just one thing about the mission of serving the blind and vision-impaired community and what it is we do together that really speaks to you?
Ted Francavilla:
So for AFB's mission, well, it's right in the mission statement, to expand possibilities and try to provide equal opportunities for people who are blind and visually impaired. That's a great mission. Different ways we do that through research advocacy at the federal level and programs really focused around technology and having technology enable blind, visually impaired people to engage in professional productive activities in the workforce and in daily life. So great mission, happy to be a small part of it for this organization.
Melody Goodspeed:
We're happy that you're here, too, and thank you for all that you do with your service and for guiding us through. And Liz, as Weaver, the three of us were chatting, can you share with the audience your story? I love ... I'm a big history person and Helen Keller was with AFB for over 40 years. And honestly, as a person myself that lost my eyesight in my 20s, I only really knew of Helen Keller as a child, and then when I got here at AFB, seeing all that she did as an adult, but we were talking about how she really helped us spread the word about audiobooks. And you had shared with us about your grandma. Can you share with the audience about this story because it's so pretty?
Liz Updike:
Yes. My grandmother was a judge and she was a judge back in the '60s and '70s. And during her career, she had the desire to give back and help in her community, in one of her areas, where she really focused a lot of her energy and resources was the blind. And one of the ways that she supported the blind, in addition to financial support and donations, was reading books and making tapes of those books. So that was the late '70s, early '80s before books on tape were really popular and she was also an avid reader herself and she wanted the blind to have access to that. And so that's how she spent her retirement, reading books and putting those books on tape for the blind.
Melody Goodspeed:
That is awesome. I love to hear people's stories about why they give and it's really awesome. And speaking of rich history and giving back, we're going to focus on a topic today that I think really deserves a lot of education as people are thinking about how they could give back to their charities of choice. We're going to focus today specifically on noncash or some call it smart giving. And as we start into this, Ted, can you just define for me when I say noncash giving, what that means?
Ted Francavilla:
Sure. And just before I answer that, another interesting point, following up on Liz's comments, when I was a young boy with low vision, I used books on record. It was not [inaudible 00:10:27].
Melody Goodspeed:
I love it.
Ted Francavilla:
But after school, I had some large print books and books on record, who knows, maybe Liz's grandmother was [inaudible 00:10:36]. So that's one reason I'm here. I think that talking book may have been produced by AFB. I didn't know it at the time [inaudible 00:10:47]. And my mom said to me ... Again, when I was young, she said, "You should give back to the blind."
Melody Goodspeed:
Aw. I love this. It's awesome.
Ted Francavilla:
[inaudible 00:11:03] I'm here listening to mom. Anyway. Your question was what is noncash giving? Was that it?
Melody Goodspeed:
Yes. And we should all listen to our moms. Yes, I like that the best, though.
Ted Francavilla:
Giving assets ... And for me, it's essentially giving stocks or mutual funds that have appreciated in value, and instead of paying the capital gains tax on those assets, I give them directly to AFB and other charities. So, in short, we'll talk about it's worth more to the charity than it is to me after paying the tax.
Melody Goodspeed:
I like that. And Liz, can you say why people also refer to it as smart giving?
Liz Updike:
Yes. Actually, it's a way of giving and supporting your favorite charity or philanthropy without writing a check. It's basically by giving an asset that you have. Typically, an appreciated asset. And what many people I believe don't understand that it's so simple because it's a transfer of assets and, as Ted said, in many cases, it's appreciated stock, or it's real estate, or it's mutual funds, or could even be required minimum distributions from your IRA account, because when people do reach the age of 70 and a half, in certain cases, 73 now, they have to take those distributions from their IRA and many people don't need those and they don't want to pay the tax on them. So why not just transfer that to the charity, where the charity can use it and it means more to the charity because they're not going to take the tax hit on it. So it's a way of not coming out of cashflow or writing a check out of your checking account, but a way of taking the assets that you already have and transferring them to the charities to support the charity and let the charity use them to the best advantage to support their mission.
Melody Goodspeed:
I love that. As I'm listening here to both of you, I myself just get a little anxious thinking about that and I'm sure some of our listeners might, too. We think of smart giving and it sounds a little bit confusing, but in my discussions with you guys prior to us getting on here today, it's really not. So I want to delve in really what that looks like and give our listeners to educate on how they themselves can look at their finances and do this in a very easy manner. I want to start with the first thing. We started with donor-advised funds. Now I really loved when we started using thing, most people didn't know what they were. Ted, can you tell us when you figured out what a donor-advised fund was?
Ted Francavilla:
Sure. And surprisingly, despite my finance background, I just heard about donor-advised fund when I was in my early to mid-60s, so I'm not sure that it's a tool that's awfully well known. Basically, what I do and what I have done for the last several years is I donate appreciated stock directly into my donor-advised fund. I do that early in the calendar year. And then the stock is valued on the date of receipt by the donor-advised fund. So now I have a pool of money, it's immediately sold and put into a money market fund there at the donor-advised fund. And actually, that money market fund is earning tax-free interest during the year while it's sitting there.
So then I donate the money ... The stock is valued and I know what the value is and I donate funds to my list of charities throughout the year. I find it very convenient, because once I designate the charity that I want the funds to go to, the amount and the purpose if it's restricted or not, they handle everything. They send out the checks. They keep the records. I can run reports to see at yearend, here's the list of all the charities I've donated to, and it's even more convenient, the next year, my list of charities is already in there. I don't have to search for them. So I find it to be a very convenient, easy way to give.
Melody Goodspeed:
That is wonderful. Liz, to add what Ted is saying, is it difficult for someone to set up a donor-advised fund?
Liz Updike:
Actually, no, it's very simple because there are many different donor-advised funds that are actually templated that you can actually plug into that are turnkey so you don't have to go to the time and expense to create your own, if you will. You can go through some of the larger organizations like Fidelity, Charitable Trust, the American Endowment Fund, Renaissance, Philanthropic Solutions Group, for example, US Charitable. So that's a turnkey process. So it's basically like opening up an investment account and it's so nice because you can transfer those assets in there. You don't even have to sell the stock. You could actually transfer the stock in there. You would get the immediate tax write-off based on the value of the stock that day, but the stock can continue to appreciate in a donor-advised fund and then you can direct it. You have the flexibility of directing when that stock is sold or if you want to sell a portion of it and give the proceeds to the charity the first year and then maybe the second year, the third year, the fourth year, and so on.
And as Ted mentioned, whatever that asset, that stock, is earning or if it's in a money market or if it's in bonds, whatever that investment is earning, that investment is accumulating and growing tax-free. So you can actually make a gift one day, take the tax deduction, but continue to grow that gift and maximize that opportunity for the charity. But it is very easy, it's a transaction. A lot of people have said, "Do I have to go to an attorney and draft a trust, and is that an expensive thing to do?" No, you can just tap right into a turnkey donor advisory fund and let them do all of that for you.
Ted Francavilla:
Yeah. Also, Melody, in addition to the places that Liz mentioned where you could find a donor-advised fund. Well, in my case, I bank with Chase where I used to work, and right there through JPMorgan Chase, I have a ... JPMorgan has a donor-advised fund. They run it through national philanthropic services. So I think it's turnkey through them and I would bet that all major financial institutions. If you have accounts there, existing relationships, I bet all the major financial companies have donor-advised funds.
Melody Goodspeed:
Thank you so much. This is such good information because I myself was getting very educated on the donor-advised fund model as well and it's so nice to hear that you don't have to ... Both of you saying that it's an easy thing to do that you don't have to go through appointments or meeting with a lawyer setting things up because I know that can be cumbersome to people. I also ... As we were talking, another thing is I know we're approaching a yearend and people are looking for their taxes and yearend giving. And with that, to touch on the required minimum distribution out of an IRA, we're going to shift to that tool to give as well. Liz, would you like to go ahead and start and talking about the benefits of an IRA giving and the required minimum distribution? We can touch on that.
Liz Updike:
Yes. Well, when you reach ... It used to be 70 and a half. When you reach a certain age, it used to be 70 and a half and then they bumped it up to 72 and now it's age 73. So depending upon when you were born, you are required to begin distributions out of your individual retirement account or if you still have a 401(k), you have to start taking distributions and sometimes people don't want to take that extra income because it bumps them up into a higher tax bracket and then it ends up that their overall tax liability becomes greater. So as a financial advisor, I am tasked with each year setting up a required minimum distribution schedule for all of those clients that have retirement accounts that are required to have those funds distributed. The deadline is December 31st. The IRS is very strict. If you don't distribute out of those retirement accounts, there's a 50% penalty.
So oftentimes, what my clients will do is they will give me a list of their charities and we will take the distribution from the individual retirement account and we will send the check directly to those charities so that the individual who has the retirement account and who is required to take the RMD does not have any taxable event or tax liability at all. And the charity is the beneficiary of that required distribution. And again, it's a very easy transaction. We have our clients on a schedule throughout the year. We hope that our clients don't wait until the end of the year, but we have them on a schedule. Sometimes they do it on their birthday as a birthday gift, sometimes they like to do that in January or in the summer, but we have a schedule and then they just send us their list of charities. If that list is not going to change each year, then we have that on file and we know on the date that they've designated that we're going to be sending those funds directly to the charity from our office and we process the whole thing. Makes it very simple for people to donate through their IRA and their required minimum distribution.
Melody Goodspeed:
That is wonderful, because when you said that you get on the schedule, that is good because I think life gets really busy. So to have that there for you to provide that service is so wonderful. Ted, when you are thinking about your gifts and distribution, do most people think about yearend giving or is it something you think about throughout the year? I'm just curious about this one for myself.
Ted Francavilla:
Well, actually, what I do is think about it at the beginning of the year and I make the transfers at the beginning of the year so I know here's the money that I have to give, and then I distribute from that throughout the year. Now as it turns out, next calendar year in December of '25, I will turn age 73. So I will ... As Liz said, I will have a required minimum distribution. Haven't done it yet, but what I plan to do is make that distribution in January. Why wait? So I'll do the ... My IRA happens to be at Fidelity, which I think has every possible investment service and all I have to do is fill out the form for a retirement account distribution and list the charities that I want to receive the funds and how much and they'll take it from there.
So again, I haven't done it yet, but it sounds like it'll be easy, convenient. And as I think of it, this will be the first place I go for distribution because, as Liz pointed out, this will be ordinary income. If I take it directly, a dollar out of my IRA after tax is worth, what, 60 to 65 cents when you factor in federal, state, local taxes all in. So it's only worth, call it, 65 cents or so to me. It's worth a hundred cents on the dollar to the charity. So distributions starting next year from my IRA will be my first priority for charitable giving.
Melody Goodspeed:
Thank you so much you guys. This is so incredibly helpful and I think it's really going to help our listeners to better understand this and get more comfortable with it because I know I am. The next one I wanted to talk about is appreciated stocks and this one for me, too, so about when people bought giving because we do have a lot of our donors that give through this avenue as well. Liz, did you want to go ahead and talk about the appreciated stocks and how that all works?
Liz Updike:
Yes. I'm originally from Atlanta, which is a Coca-Cola town. I'm going to use that as an example. When I was in Atlanta, a lot of these families had Coca-Cola stock that was highly appreciated and would pass from one generation to another and people didn't want to sell that stock because of the appreciation. But if you do pass it from one generation to the next, it is also part of the estate, and if it continues to appreciate, it makes the estate bigger, which also creates more taxes. So the benefit of moving shares of a highly appreciated stock into a donor advisory trust or even selling the stock and giving the cash to the charity is that, again, you get the tax write-off and you get the tax write-off of the value of the stock on the day that you make that transfer.
And again, you're not coming out of pocket to make a cash donation. So the way I like to think about it is maybe I want to give a sum of money to the charity, but I don't necessarily want to write that check and have it come right out of my checking account right now. But if I have the stock and it's going to create a huge tax liability where I'm going to owe taxes or if it's going to stay in my estate and go to my kids and my grandkids and cause them a huge tax liability, why not direct it to the charity and not have it be part of the estate? So reduce the size of the estate and also reduce my tax liability from the appreciation of the stock.
Melody Goodspeed:
I love that example. And now I really want a Coke really bad.
Liz Updike:
And also if you think about what the market has done, I mean, the market has gone up significantly. For example, the Dow Jones Industrial Average rose from 18,000 in 2016 to 43,431 today on November 15 of 2024. And there's a lot of surveys out there and a lot of statistics of the people that own stock and appreciated stock, only about 21% of them donate it. So that leaves 79% to 80% of people that have highly appreciated stock that may not have thought about the opportunity to donate or may not even know that that is even an option.
Melody Goodspeed:
I'm so glad you bring that up. Just so I understand. So if those individuals that didn't donate, so they're basically taking an extra hit?
Liz Updike:
Exactly.
Melody Goodspeed:
Thank you for that. That is a significant percentage that you just educated us on. And so there are smart ways to ... Oh, sorry.
Liz Updike:
The long-term capital gains rate is 15% to 20%. So that's the way that the charity gets ... As Ted alluded to earlier, the charity is going to get 15% to 20% more on appreciated stock because you're able to avoid the long-term capital gain tax.
Melody Goodspeed:
Thank you so much. Ted, did you have anything you wanted to add?
Ted Francavilla:
Yeah, same point. I think there's a lot of people out there that are sitting on stock that has appreciated a lot. I just happened to look at the Standard & Poor's 500 index. It went over 6,000 the other day. It's down to like 5,800 now, but the S&P 500 is up over 50% in just the last two calendar years. And if you invest ... That's just the last two years. A lot of people are sitting on stock that they started the investment 10 years ago. So that's more than doubled, probably tripled. So there's some big unrealized gains in the brokerage accounts out there, and certainly if you don't need to cash that money in, it's worth only 80 to 85 cents to the owner. If they sell it, it's worth a hundred cents on the dollar to the charity. So another great way to give.
Melody Goodspeed:
That's wonderful. And it doesn't come out of your cash, your regular everyday cash flow. And again, I think, from the knowledge that we've learned here from the two of you today, that people are able to make a bigger impact than they possibly ever knew that they probably thought they could with something that's very meaningful to them. I can't thank you both enough for talking about the donor-advised fund today, the IRA, and also stock appreciation. For our listeners, if you could, Ted, just provide any type of advice about giving, what would you provide to them and just looking at it in a simplistic way? Because I know it can be overwhelming.
Ted Francavilla:
Yeah, one other thought for people to think about, especially as you approach retirement years or in retirement years is choosing which account to give from. So as Liz talked about earlier and now, especially if you're in the required minimum distribution years, the way I think of it, first place to give from is the traditional IRA, because if you take money out of that, it's only worth your after ordinary income tax, 60 to 65 cents, plus you got state and local tax in there, too. So, to me, that's the number ... When I hit the next year, that's going to be the first place I go. Second place would be the non-qualified regular taxable brokerage account, because as we've been talking about, if you sell stock out of that, you're going to pay capital gains tax federal, plus state and local as well. The last place that I would go is if you have a Roth IRA, that's never taxed. So that's probably ... I would go to the first two. And in both cases, distributions from there are worth a lot more to the charity than they are to the owner.
Melody Goodspeed:
Thank you so much. That's very helpful. Liz, just nod to that same question, simplistic ways that people can, even if they're looking to start any of these funds or looking to give or even to get well-educated, how could they plug in?
Liz Updike:
Well, one of the things I just want to quickly mention before I answer the question that we didn't touch on that we should is concentrated stock positions. And I'll give you a great example. I have a good friend that worked for UPS for 40 years. So he spent his whole entire career at UPS. And so during that time, he was offered an employee stock purchase plan so that he could buy UPS stock. And that's fairly common with the large corporations. My dad worked for Texaco for 38 years. He had Texaco stock. So what happens then is when you retire or maybe if you separate from that company and you have a very large concentrated position in that stock, oftentimes it's highly appreciated as well. So you retire and then you end up with all this UPS stock or you retire and you end up with, in my dad's case, Texaco stock or name it, any of these different companies. And if you sell that stock, again, it creates a taxable event. So what are you going to do with this highly concentrated position of stock?
So that's another thing to consider, stock that you've gotten through your employee stock option plan, your ESOP plan. But I think as far as resources, the best thing to do is to engage with your tax advisor, your CPA, your financial advisor. We have a financial planning department where we have CFP, certified financial planners, on staff and they engage in holistic financial planning that talks about tax consequences and tax efficiency, and how to navigate, as Ted said, the most efficient way, tax-efficient way to give. I thought that was a great example, looking at asset locations from which to give your different types of taxable accounts. But if you're not an expert in that area or you haven't spent time in that area, it's always good to call your financial advisor to talk to your CPA and work together as a team to come up with the best options of non-cash giving.
Melody Goodspeed:
I love that. And do you have any sources or that either of you would like to share with our audience that they could go to further explore?
Liz Updike:
Well, yes. Typically, the charity has information on the charity's website that if you don't want to go directly to the charity, of course, you can go to your advisor. Of course, we have brochures and generic educational material that we can provide so that the donors can read up on that. And then, of course, any of these other independent donor advisory services that you can go to directly, as Ted mentioned, JPMorgan or companies like Fidelity, Franklin Templeton, or even the bank. That information is out there. It's easily accessible and it's very easy for me to steer clients, send them a quick brochure or steer clients to a link on the website or even go to the charity.
Melody Goodspeed:
Thank you. That is very helpful. Ted, did you have anything else you'd like to share with our audience today when it comes to this topic?
Ted Francavilla:
Liz gives good advice. There's lots of resources out there, the places she mentioned, and just talk to your financial advisor. I happen to have one at Fidelity and one at JPMorgan. They both told me things that I didn't know about before. So given where you are in life, they may point you in the best direction.
Melody Goodspeed:
Thank you so much. And also, too, as we ... And going back to what Liz says about going to the charity, at the American Foundation for the Blind, we also, too, at our website, which is afb.org, if you look on the donate button and then we have other ways to give page that gives general information to support what we're talking about today. But before we wrap up, I just ... Liz, thank you so much for joining us today. If anybody wanted to contact you to dig deeper into these topics or any other topic when it comes to giving, how could they contact you or reach out?
Liz Updike:
Either by phone or by email. My telephone number is ... My direct number is 703-973-3500 and my email address is elizabeth.updike, U-P-D-I-K-E, elizabeth.updike@lfg.com.
Melody Goodspeed:
Thank you. And it's Elizabeth with a Z. Yes, everyone. I just can't thank you enough. Ted, thank you so much for being here today with us. Thank you, you both, for all that you do for this world and making it such a better place. I can't thank you enough for being here with us today and I look forward to seeing you both again very soon. And for our listeners, thank you so much for being with us today. If you have any questions or you want to learn more about AFB, please visit us at A as in apple, F as in Frank, B as in boy, .org. And we thank you so much for hanging out with us today and we look forward to seeing you soon on our next episode of the AFB Possibilities podcast. Thanks and take care.
Announcer:
AFB Possibilities is a production of the American Foundation for the Blind. Your host is Melody Goodspeed, produced and edited by Tony Stephens, digital media support by Kelly Gasque and Breanna Kerr. Our theme music is by ZISO, complements of artlist.io. To learn more about AFB or to help support our work, visit afb.org. Like what you heard, leave a comment in the comment section. Be sure to like and subscribe. If you have a show idea or for questions and comments, email communications@afb.org.
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