Put Your Money Where Your Mouth Is

By Wendy Wan Turk
Email: wendy@gerberkawasaki.com
LinkedIn: wendy-wan-turk-6914282b

I was originally going to write a light-hearted article about gardening, but it seemed a little tone-deaf in such an extraordinary time. But who doesn’t like a little escapism when all you hear day-in and day-out is incredibly sad news that makes you feel helpless or hopeless? But maybe that’s our problem. We’ve tried to escape the bad news for too long. We’ve tried to avoid an economic meltdown for years and end up playing kick the can. Or we live with the fear and anticipation of the other shoe dropping. So, what can we do?

We can put our money where our mouth is. If you are fortunate enough to be working and/or have extra income, the easiest action is to support the causes you believe in. One of the provisions in the CARES Act (Coronavirus Aid, Relief, and Economic Security Act) now allows all taxpayers to deduct up to $300 in the 2020 tax year, regardless of whether you claim the standard deduction or if you itemize. If you do itemize, the CARES act eliminates the cap on charitable gift deductions, so you could fully deduct gifts equal to as much as 100% of AGI (Adjusted Growth Income) this year. But there are some caveats: The increased limits for individual and corporate taxpayers apply to cash contributions only. They are limited to gifts to public charities and certain foundations. They do not apply to gifts to donor-advised funds.

Additionally, there are also donor-advised funds. A donor-advised fund is a little like a personal charitable savings account. A donor creates an account and makes a contribution of cash, stock, or other assets like real estate or artwork and can take an immediate tax deduction for the gift. The accounts are controlled by a nonprofit, called a sponsoring organization, that invests the assets and manages the donor’s account. Community foundations often serve as sponsoring organizations and so do nonprofit arms of financial-services firms, such as Schwab Charitable (which Gerber Kawasaki can manage). Once a fund is established, donors tell the sponsoring organization which nonprofits they’d like to donate to from their accounts, but the sponsor isn’t legally obliged to follow that advice.

Beyond giving to charities, we also have control over how we invest. Finding companies that align with your causes, beliefs, and values is another way to align your principles with your actions. Typically, I’ve had many requests to eliminate investments in certain sectors, such as big oil, or tobaccos, but I think in today’s societal climate, the desire for meaningful, activist investing will increase, and as such, more companies will meet ESG criteria.

ESG (Environmental, Social, and Governance) investments are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. Environmental criteria consider how a company performs as a steward of nature. Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights. Additionally, as ESG investing grows, they have a practical purpose beyond any ethical concerns. They help avoid potential problems such as oil spills, emissions scandals, etc., and they help bring diverse voices to corporate America.

As a firm, we know how important it is for our investors to be able to choose the investments that align with your morals, and one of the most important steps we take is researching the world of investments to find those companies fit the ESG criteria and can also get you to your investment goals.

More than ever, this is a time to listen, but also a time to use our voices in every way we can. Invest, share, speak to the ideas and values that will bring us together and lift everyone to be successful.

Investment advice offered through Gerber Kawasaki Inc, a registered investment advisor. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All investments have risk of loss. Past performance is not indicative of future results.

Gerber Kawasaki, 2716 Ocean Park Blvd. #2022 Santa Monica, CA 90405. Contact us at (310) 441-9393 info@gerberkawasaki.com