Featured Planned Giving Blog Post

Payback: We Like to Help the Charities That Helped Us—And Sometimes We Can Benefit Again

Posted February 2021

When asked why he made a $1 million gift to a certain organization, a donor named Don replied, “It’s called payback; this organization was an enormous help to me and was a major factor in my life.”

There are many such instances where donors regard their gifts as a payback for a benefit received: It may have been a life-saving treatment at a hospital, a kindness to an elderly parent during hospice care, treks in a wilderness preserved by an environmental organization, years of enjoyment of music or drama at a performing arts institution, the educational experiences of children at a museum or zoo or family support organization, a scholarship that enabled them to stay in school, help provided by a social service organization—or even more specifically, support you or your loved ones have received from our organization.

You may be amazed to discover that you can make a payback gift while also receiving something back—not just emotionally but also financially. If you make an outright gift that we can use now, the financial give-back is a charitable deduction that can reduce the income tax you would otherwise pay. If you create a life-income plan, such as a charitable remainder trust, your financial give-back is life income as well as income-tax savings. If you provide for a legacy gift through your will or beneficiary designation, there could be a financial give-back though estate-tax savings (depending on your situation).

The concept of payback is within us
We seem to have an innate sense that accounts should be balanced and debts should be repaid. The Canadian author Margaret Atwood, who wrote an entire book called Payback that inspired this article, describes how the dynamics of the “debtor/creditor” relationship arises from a sense of fair play that appears encoded in our genes (and is taught by most religions and many cultures).

If someone does a favor for us, we feel that we should return that favor. If someone invites us to dinner, we are likely to invite them to dinner in return. If an organization sends us a useful item, such as address labels, we may be reticent to use them unless we send a donation. This balancing of the accounts even seems to extend to such innocuous things as the weather: if we have a series of warm, sunny days, we expect to pay for them with cold weather in the future.

Sometimes, a gift is not motivated by a sense of obligation to a particular institution for a specific benefit but rather to the larger society for making possible the creation of wealth. When asked why he was giving most of his immense wealth to charity, Warren Buffett commented that he got a “lucky ticket” and he believes that those who get a lucky ticket have an obligation to help.

Repaying a kindness with a kindness, or a favor with a favor, or making a significant gift to the charity or society from which one benefited, or helping the society that has provided our wealth, can be quite liberating. Receiving a tax benefit from the gift is like icing on the cake.

We would be pleased to talk to you about how to structure a gift so that it is financially beneficial as well as emotionally fulfilling.

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