For some, investing is just about making money. For Citigroup (C) - Get Report Private Bank clients, each of whom have a minimum net worth of $3 million, wealth is about growing assets and -- just as importantly -- sharing them.
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Citigroup private bankers practice what they call "strategic philanthropy." Simply put, the twofold goal is to help clients preserve substantial wealth, while also sharing that money via tax-efficient charities and trusts.
Clare Costello is vice president of Citigroup Private Bank, which has $150 billion in assets under management worldwide. Here, she explains how she asks clients to think outside of the philanthropic box, so to speak, while she works with her colleague Doug Moore, national director of estate and charitable planner for Citi Trust Services, a division of Citigroup Private Bank. Moore advises Costello and her clients how to set up trusts and charities in the most tax-efficient manner possible, using such means as charitable remainder trusts and charitable lead trusts.
TSC: What is the first thing you might advise a new millionaire, or billionaire, client who comes to you at Citigroup Private Bank, specifically asking about philanthropic options and/or ideas?
Costello: We look to leverage skill, talent, time and expertise -- and the money is usually the last piece. Statistics show that if you get personally involved, or volunteer, the dollars that follow are usually greater than if you had just been a direct giver. But also because it helps you in evaluating the needs there and the effectiveness of your gift.
TSC: How do you fit into the picture, Doug?
A client might want to create a trust that will allow them to have income and income tax deferred for use at a later date, perhaps when they retire and are not earning money
and are therefore in a different tax bracket. Such a trust would allow assets to grow inside of the trust, tax-deferred.
They might want a charitable trust where annual tax deductions are allowed. Or they might want a trust that provides flexibility for certain objectives from a financial point of view for a client, that ... addresses financial planning. There are many considerations from a tax point of view, as well as from other than a tax point of view, why someone would consider giving to a charity or setting up one of their own.
TSC: Clare, do you have to be among the very wealthy to be able to effectively give to charity?
No. In fact, I have seen some of the more effective efforts come out of people's kitchens than out of the family foundation staffed by 20. In fact, we advise clients on how to make grants through
existing private foundations that distribute money each year. And many wealthy families are particularly interested in getting the younger generations into the philanthropic mind-set.
For our clients, philanthropy is an integral part of financial planning. We hold many conferences to teach them about the human dimensions of wealth, and on how to become "strategic philanthropists." Monetary resources are not always the key to giving.
TSC: How have your clients responded to the events of Sept. 11?
There has been a tremendous, visceral response to Sept. 11, so great that there is not even one story that I can relate.
TSC: What should people of different income levels be thinking about in terms of how they might practice the art of charitable giving?
Regardless of your worth, it's what you care about. What keeps you up at night? What's your greatest triumph or sorrow, and why? What can you do to fix it? What do you want to read about 10 years out? What do you want for your children and for future generations?
That is the same starting point, regardless of how much money you are going to throw at it.
TSC: Finally, when was the Citigroup Private Bank family advisory practice's philanthropic services started, and why?
Philanthropic advisement is not an official department. It is just part of the services we provide. The group is two years strong, founded to address family dynamics and issues related to substantial wealth.