xhv8mzw7ge79waga35o97s2wbzpfr6 Charity Strategies that Multiply Your Ability to Give | IREI Summit

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Paul Mayfield

– Investor/Philanthropist –

For more information contact:

paul@whitefarminvestments.com

  Video Length: 36 min

Charity Strategies that Multiply Your Ability to Give.

- Paul Mayfield, CHOICE Humanitarian, N.A.C.

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Background:

Paul Mayfield is currently a Partner at Microsoft, the top one percent of seniority.

Outside of work, he loves to spend time with his spouse and children. Helping build products is great. Helping develop children is greater. Paul also volunteers on the board of CHOICE, an awesome org helping rural villages rise out of extreme poverty. Paul volunteered for STEM education related efforts: First Robotics, Digigirlz, speaking at schools/camps. Paul currently volunteers on the Engineering National Advisory Council at the University of Utah where he learns from many interesting people. Finally, Paul actively invests in public markets and in real estate where he has grown over 20 cash flowing rental units. Someday, Paul will deploy real estate gains into startups as an angel investor, giving back to tech.

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0:03  
So, thanks. And with that Steve has given my presentation and we can wrap up. Thanks, Steve. I am just one of the investors here. Professionally, I work at Microsoft, I'll talk a little bit about that, doing product development. So I have software engineers that I manage. And I do present at technical conferences and feel very comfortable as a subject matter expert there. This is completely outside of my comfort zone, which is part of the reason I agreed to do this. But I do think we've discovered some fun stuff between us and some of the folks at fig on how to really accelerate the charitable giving. So we thought we'd share it here. But before that, let me give you a little bit of introduction. So that we can walk through the the scenario Steve talked about. First thing I want to show you, and see if I got it on this right is this quick video, I apologize for the buzzing.

 

0:58  
So this is my 16 year old daughter to my 13 year old daughter, Claire, at the Macaroni Grill, you ever get a chance to go there in Salt Lake City they play on weekends.

 

1:12  
The reason I give you that is because well, I'll start with the family. And sitting here at the front of the room is my wife who hates attention, but also maybe could wave everyone. For the past, I would say 15 years, Allison spent maybe 2030 hours a week coaching violin to her daughters. Allison got a violin performance degree as her education. And if you familiar with that, it's eight to 10 hours of practicing every day. And we're performing. And it's been a real value that our kids learn that discipline. And it was fun to see that payoff at the Macaroni Grill. But it was fun for another reason as well, because I am the father that is constantly talking to the kids about investing and planning your future and money. And that opportunity came up because Kate was working as a host this the Macaroni Grill was planning to quit and came up with a plan which was to tell the owner Hey, I'll play violin for free during the Christmas season. They said Go for it. She showed up with a tip jar and her sister and they played for a couple hours. And they thought this would be a one time thing until they saw the online reviews which said the service is terrible, but the violence are good. And at that point said Kate said well maybe you want me to come back for a couple hours a week and you can pay us and so pay it forward. Now she she and her daughter her sister are making 30 bucks an hour each between the tips and the pay from the Macaroni Grill as a teenage job. And the swelling pride of a father seeing the entrepreneurial instinct happen in his daughter cannot be described I'm sure the selling price of violence go to of course, but

 

2:48  
and, and so that was a that was a lot of fun. And Kate and Claire are now going to go play it down nice clothing because now every time Kate goes to any business, she offers to come and play the violin there and she gets like a one person center. Right, but that's fine, right? So that's so that's Kate there on the far left and left, or excuse me, on the far left, on the far right is my son Sam.

 

3:11  
I think all of the brainwashing I attempted has worked because he's just declared his major in computer science. He is working part time. And living in a house that I bought us in my portfolio. It's only when I manage and he has three roommates. And he runs that thing like a Nazi best property manager ever. And oh, by the way, his rents paid out the 529, which is kind of a cool trick too. But he is

 

3:39  
I remember sitting down with him when he was eight years old, mowing the lawn, talking to him about planning for college talking about how to save and grow, invest. And he's going to make it through with a master's degree on track without any debt whatsoever actually end up a little bit in the positive from all this he's got some scholarship money as part time work, starting to learn some of investing. So super happy about that. So that's just to give you the sense of what a Nazi I am with my kids about thinking about investing. And I have not showed them this chart yet. But at some point they'll see it. I think Sam's getting to the point where this could be good. Maybe Kate as well.

 

4:16  
I think the journey they could take through their financial life, if it's a progression can start with negative cash flow in college, right, get to the point where they're living paycheck to paycheck, get to the point where they start to have three months covered, six months covered, now they start to feel more confident, grow to the point, they get five years covered 20 years, and then hopefully reach a point where all of their expenses can be covered. I do talk to them about wealth in terms of the time that they can survive without income, you know, not not $1 amount or something like that. So they can accelerate this journey or decelerated based on the lifestyle they want to live, they have to think about their expenses as well as the the money that they earn saved.

 

4:57  
And I talked to them about the kinds of investments that don't where they, they need to focus on preserving their money to build up the reserves to then have some liquidity, depending on if they're going to start their own business. Or if they'll go into the workforce. You know, they'll they may start the active growth or passive growth first. But eventually try and get to the point where they can go in turn some fun investments that are opportunistic, and that are kind of fun. So, but the real point here is that this is a journey that goes from stabilizing yourself financially, to getting accumulation to doing the shift. And really the most important and I'm not kidding about this part of this. And that I that I try to

 

5:40  
you know, relate to them is really this impact. The money is not the end money is not the point, money is a means to an end, the whole point of going through stabilization, accumulation is to get to the point where you can have you can use that as a tool to have impact, right. And I had a couple role models in my life, that have inspired me to think this way about about money myself. And here's the first one I happened to work at his company. As I mentioned, when I was I think seven or eight years out of college, I had my first chance to talk to Bill while he was still at the company. Actually the technology that my team was building

 

6:17  
was being used by the IT department at Microsoft to protect access to bills email. And

 

6:25  
one day one of the folks in the department had said something to the effect that the technology was a pain in the ass. So Bill wanted to have a conversation about that. And the way that we we wrote that was every week, we had this event called think week where we'd submit papers. And Bill would read them. And there were I mean, it was a lot of pages of paper coming from the company. And then he gives feedback and response on him. And we explained sort of what was going on with the technology, how it was being used in a unique way by the IT department. Bill said, well, let's come have a chat about that. So we walked him through the whole thing in the meeting, I was sitting probably, you know, across the table, not much wider than this.

 

7:04  
And he liked the idea,

 

7:06  
actually. And he was looking around to the executive staff. And he was about to say, let's go support this, let's go drive it forward. And he paused himself. And he looked at me, and this is what he said.

 

7:18  
He said, how many people are using the technology that you're doing right now? And they said no one, just Microsoft, it says, Oh, great, you know, I've seen a lot of good ideas come through this, this room. The value is how good that idea is times how many people use it. So your value is zero. You know, and as the seven, you know, you're out of college kid, I was pretty intimidated by that statement. And it did stick with me as a result, but he was right. And what what is not defined in value. And that statement was the dollars of revenue, the you know, that sort of thing it was the impact was going to have in the world. I think, you know, you think about Bill taking a transition from you know, being in the prime of building a large successful company and the side to enter dedicate his life to humanitarian causes. If you're, if you're as we call it, the high order bit, if your primary motivation is to have impact and make a difference, it makes total sense to do that transition, right. And I think that when our company's been at its best, it has had impact as the as the motivation. And when it's not, it's had other motivations. And I think you can look at a lot of different organizations and think that so I am proud about working at this company, in part because they have this philanthropic value, and they have this impact value. Just give you some ideas, I pulled this off of the one of the public Microsoft sites that gives an overview of the company is actually the employees from the company have donated $1.6 billion to charitable causes. Through the company's matching program over the course of 20 or so years. every October, we have this massive event, we come together and we you know, raise money, the company match, you know, I think 12 or $15,000 a year against the charitable donations, they'll match $25 an hour for the volunteer hours we put into organizations. Um, so I just really like the the focus that the company has, in our our new CEO, Satya, also a really impressive and also very philanthropic person.

 

9:22  
He has a real cause and my for accessibility, trying to use technology to make sure that opportunities accessible to everyone. And so you'll see actually the superbowl commercial that Microsoft will run this weekend, that'll be a theme of the of the commercial. And you'll also see, I'll do I'll show you this kind of cool, this is a new feature coming didn't come here to do a product demo. But it's still kind of fun. If I turn this new checkbox on in PowerPoint,

 

9:49  
and wait a second, now what will happen is speech recognition is going to, you know, in real time translate what I'm saying and provide subtitles to extremely useful if you're speaking to someone with English as a second language, or that has a hearing impairment or any of those sorts of things. And so it's pretty cool feature, right? But I'll tell you, this kind of feature gets highly prioritize because of the value of the CEO. I mean, I've seen that in the company. So it's pretty cool to see. All right, but so as not to be distracted. I'll turn that off.

 

10:20  
So here's my second role model. Moving on from Microsoft, this is a little more personal to me. This is my Uncle Jim. He hiked Kilimanjaro at like age 63,

 

10:33  
retired political science professor and his specialty was Middle Eastern government, and spent the better years of his 40s 50s and 60s in Jordan, Syria. Actually, when the second gulf war happened, and the rebuilding effort occurred in Iraq, his colleagues in Iraq requested that he'd be involved and the State Department recruited him to be in charge of the southeast portion of the country, he lived in Baghdad had his life threatened many times, I mean, very interesting guy.

 

11:01  
But over the course of of those years, he was, you know, face to face with real poverty, and was really moved by it had a partner and they decided to create this humanitarian group. And so here is some pictures I took from an outing with that organization. The basic approach they have is, is a total grind. They will hire people in a country to reach out for a year and just start making relationships with it with a village with a community in a very remote area where there are not services available from the government or other nonprofits and things like that.

 

11:39  
After a year of doing that, they if the community says, Hey, we want to be a part of doing a self development program for us, then they institute a program where every year villagers show up, they bring, you know, in this case, it was like 10 pesos or 50 pesos or something like that. They put it in bags, and they put it you can see.

 

11:58  
I don't know if my pointer works. Oh, yeah.

 

12:00  
That is a lock or sorry, that's a lockbox. That is a toolbox with a padlock,

 

12:05  
where everyone puts their money sits in the middle of the village. They actually doing this for like 20 years, I've never had one stolen.

 

12:13  
And they have elected someone who's going to be president, someone who's going to be a secretary and the Secretary think might be out of the frame here, but has a little green notebook with a ledger recording everything that happens, nothing else happens for a year other than everyone comes together participates in savings program, they want to continue that little base of capitals and use to do micro finance loans to start businesses and to develop projects where they start building systems and things like that within the village. But the point of the organization is that they're there to sort of help train on the programs, but the villagers implement the program. So there's some ownership there.

 

12:49  
And so they'll they'll spend five years, every single day just sort of in the training, doing this programs, and then hopefully graduate, I think in Mexico, the graduation rate, meaning if they left the programs would continue on their own, it's somewhere around 60%. So not 100%, but better than zero percent. This This one, this is Maria, she had used the micro finance loan from the community box to contribute her part of a government program that allowed her to purchase this tortilla machine. And she went she she like hundred x her tortilla population or production from that program, she actually grows the corn outside of the cinderblock room you see here and cooks it in a wood fire every single day to create the meal then goes through here and hand presses the tortillas. So it is pretty cool when it can work. This is the local group down here from Mexico. That's the organization just for the How are we doing on time, by the way?

 

13:52  
30 minutes, Oh, good.

 

13:53  
So

 

13:55  
you know, choice have been doing that for about 30 years, or sorry for about 20 years. And then they started this pilot program in the Paul, where they tried to implement their program at 180 villages all at the same time, reaching 60,000 people, they raised about a million dollars to do this, the three year goal was to show that there was an impact. And so the my my uncle, the PhD oversaw this academic, Lee rigorous process of doing random samplings of populations and control groups and doing surveys before middle and after and that sort of thing. But when they were done, here's the director in Nepal, being recognized by the Prime Minister for the work they've done.

 

14:33  
This is a little chart. And by the way, all the data that I'll show you here was hand collected by Napoli's people that were working for choice with the villages, and then we're submitting it sort of in Excel spreadsheets. But the money raised you can see from 20, 1415

 

14:54  
was

 

14:55  
amplified from partnerships with government with no other nonprofit, it's even labor and supplies coming from the villages themselves. They, they have a measure and index that they use, and I'll show you actually,

 

15:10  
this might be a good point to just show you really fast.

 

15:14  
This is the this is a sort of paper version of the

 

15:20  
go back up here

 

15:22  
that come out big enough, hopefully, okay. So here's the survey instrument they were using, they would ask information about the families. I won't I won't belabor this, you know, the quality of the lead the life, how happy do they consider themselves? How do they feel about their opportunities? You know, do they have income, that sort of thing? A little bit later, asking questions about, you know, basic services, access to water, latrines, that sort of thing? Is the kitchen free of smoke is a big one, actually, that number eight. Anyway, this will go on for about 150 questions, questions about nutrition and how often they're able to get access to certain different kinds of foods. So it takes good hour to administer this one especially have to be careful on how you parse the answers that come back, lots of people are, are motivated to give to think they're supposed to give a good answer. And, and then you have to kind of probe a little bit, some economic information. So they, you know, based on that,

 

16:25  
they felt like the the extreme poverty, which is, can only live in a certain circumstance, we are coping with poverty, you have to spend your hours of the day traveling to get water, that sort of thing, had a dramatic decline amongst that population.

 

16:41  
And so they we we felt pretty good at the organization that this was working. Just in case, it's interesting here, some of the different projects that were happening, you can see goalkeeping was one of the biggest ones and produce both income and access to protein and that sort of thing.

 

16:55  
So when I joined the organization, admire the work my uncle is doing, but have a chance to kind of get personally involved. Because from this, I mentioned in the Nepal project, all the collection of the data was being done pretty manually. And so over the past several months, Sam has actually been helping quite a lot. We built out a mobile app where the in country personnel can record those survey questions or record, we just build a sister and or we just build a train. And then all that data, real time goes up to the cloud. And then we can produce reports and things like that. So we're hoping that the next round of this kind of project ends up being a much more automated real time, we don't have some big data collection normalization effort to try and build the spreadsheets into graphs, right. So if by the way, I'm going to come back to this, if if folks are interested in this room, this is the one shameless plug I'll make during this presentation. If you're interested in having a pretty amazing life changing experience, choice has this way that they will put you in the village for a week, working help volunteering hours on the projects that the community themselves are planning to do. They actually don't need your labor. But in fact, they pushed me all the way when I tried to make some money. But that they bet, but it's a boost that it matters to them that someone would care to show up. But the opportunity also to experience real poverty and have your children experience poverty. The number of stories and testimonies this organization has from building the First World Third World connection is pretty amazing. So if you'd be interested in going to Nepal, Bolivia, Ecuador, Kenya and those places and trying this out, you know, see me after I can, I can hook you up. And if you're otherwise interested in getting involved, let me know too. there's a there's a lunch that we do has a fundraiser every spring and then there's a big black tie party every fall. And those are two of the major fundraisers and there's even a

 

18:54  
usually a big golf tournament that happens as well. So if any of those things are interest, just let me know. So then, as Steve mentioned, I was invited to figs charity auction, which was for the Children's Miracle Network. And

 

19:07  
I was bidding on a couple items that I wanted. And then this item came up for bid, which was you could go to the Red Sox, Yankees 2019 baseball game, in a luxury suite in the new New York stadium with Lou Piniella as your host. And sound awesome, right?

 

19:27  
I'm not a sports fan. I don't even know who Lou Piniella was, I had to look it up, looked like he had some pretty good sports credentials.

 

19:34  
But what end up happening was, the big came out at 30 $500 to start someone did it, I had this thought in my mind, well, it must be worth more than 30 $500,

 

19:44  
which is probably the sort of thought many of you have had many times in real estate investing, I see value there, I don't know what I'm gonna do with it. Right. So I did 36. And I thought, if nothing else, I'll just try and get it up and help, you know, raise money for a miracle network that way. And then I wanted a 36. Because, to my surprise, no one else out there, me from there. And my first reaction was, oh, shoot, you know.

 

20:07  
Now I gotta come with 3500 bucks. But as I thought about it, you know, I was having the next week an auction with choice. And I thought, Oh, this might be an interesting way to sort of see if choice might have access to a Yankees fan in the audience, or even a Red Sox fan on the audience, maybe we could, maybe we could try and use the return that way. So here's kind of how the entire thing worked. And I have to take a step back and say, two years before the auction, I bought two shares of a total market index, they cost 877 at the time,

 

20:39  
then that appreciate it for two years, just for 323. Not a lot so far. Then, once the auction and when that did, so I had to figure out what the retail portion was, I had to email back and forth for about four weeks to figure that out. And so they priced 20 $400, a retail portion. And then 1200 over and above that was sort of the donation that I made. So now what happens is I paid 30, $600 out of pocket, but 323 of that was kind of the growth that had happened on that index, right? So then I was able to write off the non retail portion. So I'm just assuming a 40% tax rate here. And so what happens is the IRS is now putting in 480 of that, because that's going to come back to me on taxes, right? Then we're you know, I use my company match also for the retail portion. So now, Microsoft in the game and the Miracle Network up to 40 $800.

 

21:32  
So far, so good. Any question? Okay. So then the next week, donated that choice that package the choice auction, and wrote off the remaining retail portion, because now it was the thing. So $960 comes back to me, growth is the same IRS, isn't it more Microsoft's in the same amount. Now there's 40 $800, for the Miracle Network, 20 $400 for choice.

 

21:55  
Then when match the retail portion, because now it was donated. So now Microsoft into it for 36. And you can see the rest of them. There's 4800 for each. And then it sold for $10,000 at twice auction. So it worked, there was a fan. And so the total number across all of this was, you know, little over $17,000 went to the Miracle Network in a choice. And my cost out of pocket was essentially 1837. Right. So felt pretty great. And honestly, I sort of fell into it. Because I saw the value, I thought there's got to be someone's going to build this up. So I jumped in. And I know folks here can relate to that kind of feeling. I feel like my real estate investing, side hustle has taught me to think that way. But this is the pie chart of where the money came from. At the end of the day, you can see my contribution up there. And then the the Yankees had their initial contribution, the arbitrage brought more. Now, I didn't make all those contributions, obviously. Right, they came from a number of different sources. But I said, you know, the thought I have here is that there's no reason when we go and think about our charitable giving and the impact that we're giving, we can't use a lot of the skills that we've learned as investors to pull together a syndication of sort, right.

 

23:10  
If we recruit people to participate with us, we can juice the return to the charities, right. I mean, I have so much respect for the four Plex investment guys for donated the proceeds from this conference to the underground railway. Right. Yeah, I mean, what a fantastic way to take advantage of a situation where so many of us are here, to learn something for our professional benefit, but to leverage that in to a charitable gift, right. And so, you know, it was nice, I had the match. If I wasn't working full time, I wouldn't have that match. But I have access to people I have access to network, I there are ways to get the match outside of your employer match. Right. So this was the this was kind of the cool thing that came out of that.

 

23:52  
And now I have another thought.

 

23:55  
This is the this is a smooth curve of the highest tax rate, since it started at 7% in 1938, when the income tax rate was created. And you can see sort of in our era, it's lower than it was say 40s, 50s and 60s, right.

 

24:12  
And the 1929 crash came here. And of course, we had a couple wars and it shot up the the largest marginal tax rate. And it sort of makes sense why that happens, right? Because they're, you know, both from the unemployment and the lack of revenue that happens as a part of the crash. And also from the extra government expenditures from getting involved in two world wars. There's a lot of bond creation, a lot of debt that the government goes into, and there's interest payments due on that. And you know, the money to pay that at some point has to come through the system they've created to create that revenue. And so we see the spike, then the 80s kind of comes down, right?

 

24:52  
Then here is the 2008 crash.

 

24:53  
So then

 

24:54  
the second draft to kind of look at here is Okay, so here's the national debt as a percentage of GDP, which I'll take maybe GDP Think of it as our our economies income. And here's our economies debt. So this is almost like the debt to income or the debt service coverage ratio graph over time, right. You can see early on Yeah, we had a lot more debt than we had productivity in the economy. You know, after world after the World Wars, our income started coming up a lot in our debt started coming down. And that kind of brings us to 1980. And then the amount of debt we take on because those income taxes were lowered at that time, productivity increase. So income was increasing during this time. But that was increasing even more. And then of course, you're related 2008 crash, and it's been jumping through if it's still going up after that as a percentage, right? So if you're looking at sort of the creditworthiness of our economy over time, this this is the picture I I think have, and here is the time when the largest rate was 70. And here's the time when the largest rate was 3540. So don't know where this goes. But the fact that this line goes so steeply similar to this line, leads me to think at some point taxes go up, regardless of politics, you know, I mean, it's just there's a physics thing that certainly that happens at some certain point.

 

26:14  
In fact, I'm reading this great book by Ray Dalio, I don't know if folks have read his big debt crises book, but he's the Bridgewater founder, largest hedge fund in the US, and he has this, you know, hit the base of the book is that our economy follows very mechanical predictable rules. There's a 75 year debt cycle that fuels a lot of everything that happens. And if you look at where we are in 2018, or 2019, is very similar to where we were in 1937, because we had just come off a big recession, where interest rates rates went to zero. And a lot of money printing happened after and a lot of leverage, and so forth. So his prediction is what happens after 1937, which isn't always pretty, but even talks about the rise of populism has been something that is a result of all this, because in the times when debt has been taken on in the economy, it means that asset prices are being inflated the wealthy own assets, the working class doesn't. So then the gap between the wealthy and the working class gets larger, that creates tension and creates populism, when there's a backlash against them. Right. And we start to see that happening, things like Brexit as well. So very interesting book, but does make me think, okay, taxes are probably going up at some point don't know when, and they're relatively on sale right now. Right. And as a result, if you think about what a 70% tax rate would have done to the syndication pie chart we had before, it actually puts the IRS in for a bigger slice than it would have put me and leave everything else pretty much the same. And I think that's kind of an interesting insight as well. Because if we're thinking about our lives, over a 30, or 50 year span, or something like that, there's going to be better times to get better leverage,

 

27:58  
you know, on your charitable giving, assuming that remains a tax deduction, right. And so I think they're interesting ways to kind of think about how to play that. And then I'm starting to myself, think about that.

 

28:10  
Kind of last parting thought here. You know,

 

28:13  
at the point, when you have, you know, 10s, or hundreds of millions of dollars, I think, the typical thing to do is create your own private foundation and start to manage it. And there's all sorts of reasons for that, there's sort of a lighter weight version of this, I think, which is, you can go to, you know, fidelity, Charles Schwab or any of them and open up what's called a donor advised fund. So in the case of fidelity, it's called fidelity, charitable com.org, or something like that, or fidelity charity. So what it actually is, is it's a it itself is a nonprofit organization. If you have a piece of real estate, or appreciated stocks or securities or something, you can donate that to fidelity charity.org, right. And at that point, it becomes a right off to you, and they they can sell it and avoid the capital gains, I think you'll if it were, if it was real estate, I think you'll have to pay the depreciation recapture that point.

 

29:04  
But you can avoid a lot of

 

29:05  
what would otherwise be a tax consequence by putting into the fun, then they'll invest the proceeds from the fund into you know, I think you can even advise them on where the investments go, but it's market based securities at the end of the day. And from there, you can advise the fund that they should be giving a grant to charity, x y&z so you can kind of have this bank account that sits there and grows at five or 7%, or whatever. And year over year, you want to go to the next charity auction and get your leverage up. It can be coming from the growth of this account, you can even make this a little bit of an announcement, right? And use that an ongoing basis to sort of fund your your philanthropic needs as I understood it.

 

29:47  
But then you might say, well, if I've got an appreciative property, and I want to put it into the donor, advised fund, what if I want to buy half of it in or what if I make it my basis back out and put the profit or something like that. And I think, and let me just also give the disclaimer, all of the what I'm sharing right now is how I'm thinking about things moving forward, there's probably someone in the audience that knows a technicality that they'd love, feel free to correct us here in the room. But I think the way to do that is to insert a charitable remainder trust. So the charitable remainder trust, if folks aren't familiar is, is that the idea behind it is I'll give the property to a trust. The trust will be qualified as a nonprofit trust, if you will, and will sell the property and give the proceeds out. But if I was hoping, you know, I had a million dollar property, I want to get half a million dollars back out and only donate 500,000. They'll structure the trust to be able to say there's an income or an interest portion of this donation. And then there's a charitable portion. The IRS has rules for how to calculate the charitable portion, which is called the remainder, right. So when you donate to the charitable remainder trust, you'll calculate what the remainder should be, you'll take action tax write off for the remainder, and then the portion that is the interest part gets paid out to you. And you can even have it paid out installments over time, you can say 7% of the value of the trust gets paid out annually to me until determined you define the term as well. And then when the term of the trust ends, then the proceeds are sent to the donor advised fund. And then you can use that to go out to the charities as well. So I am thinking of a structure kind of like this for some of my future giving as well, when I when I get some of these properties. I'm you know, under five years in real estate right now, but 1520 years down the road, when I have some properties I want to send this way. I'm thinking of sending through this kind of structure. Oh, this is a I'll take a slight diversion and come back. This is sort of an you can go to websites and punch in the numbers for how terrible remainder trust work. But this is one where if you had a property that you bought for a million that appreciate it to one and a half million conservatively over 15 years, you donate to the trust, you set it up for 7% dropout rate for 20 years, you assume a 40% tax rate, then ultimately a million dollars will go to the charity 1,000,024 will come back to you. And you'll save a whole bunch of gains on taxes. So that's kind of the concept put into numbers. But it's so complicated. You really have to use like an app to figure it out.

 

32:20  
Yes.

 

32:25  
Okay.

 

32:26  
Yeah. And then ultimately goes to the charity after that. Yeah, yeah, you can set them up to be like an annuity that that lives with you for life, or you can set them up for a specific term. Yeah, that's right. Yeah. So if the orientation is Oh, I, I want to basically put the asset into the trust, and I want to bleed off income from it. And if anything's leftover that goes to charity, then you set it up for sort of a lifetime thing. If the orientation is I'm trying to maximize the impact of the charitable given, I'm not really trying to keep you know, much more than than the property, then you can set up for a shorter term and take the distributions out, and then have it rolling faster to the, to the donor fun.

 

33:04  

So this is what

 

33:07  
apologies, but green is hard to read on this background. But this is sort of how I think I would do the auction. Now with all of the above next round, 20 years from now, which is, you know, first before we even go to the auction, buy a property, wait for it, depreciate, send it through the turtle remainder trust, take all the tax deductions, then get paid out the income and have the rest go to the donor advised fund, at this point, then you can go to the auction, have the donor advised fund, buy the shares of the of the index, have continued to appreciate when the auction bid, pay the retail portion out of distributions from the charitable remainder trust, if you want, and then have the remainder be paid from the donor advised fund, because it's all that's earmarked for charity, then you can write off the taxable parts that may have been taxable from the distributions from the turtle mandatory that way. And then, you know, match the retail portion, either from an employer from the donor fund or by recruiting other partners in the process.

 

34:12  
And the rest of it kind of plays out like that. Right. So this is the one where I really need Neil, from yesterday to tell me how the math works on it, because I don't know, there's enough, there are enough variables here. That's hard to say exactly how, how the pie change, for sure, but it's pretty clear that there's a whole lot of deduction that happened several years before even took to the auction, and then you're using funds that are growing tax free to pay this thing down the road. So I think your ability to sort of get that, you know, one to 10 leverage has got to be going up to, you know, one to 15 or something like that by by being playful about it, and rolling it out for several years.

 

34:47  
And so with that,

 

34:48  
really time to wrap it up. You know, I think the the interest the the real kind of takeaways from all this for me, and that I hope can resonate with you all is, you know, some, we're all here to learn to make money and make deals and grow. But at some point, we want to think about not just accumulating wealth, but also how we can use that as a means to an end to have impact, right.

 

35:11  
And that the skills that we learned, being entrepreneurs, being investors, you know, networking can be used to maximize the impact as well as maximizing the wealth that we're here to learn about. So think about the how to approach you're impacting your charitable giving them that way, the next time you're going to charitable event, the next time you're giving a charitable contribution, you know, how could you use the skills that using real estate investing to make that more,

 

35:36  
right?

 

35:38  
So and then also just being thoughtful about the tax code, how that plays? If they're there might be opportunities right now to do things post tax that will make better sense to do pre taxes, tax rates go up over time.

 

35:52  
And then if anyone wants to go to Nepal or get otherwise and by choice, let me know. And I can open up for a couple questions. That's the presentation.

– Fourplex Investment Group –

IREI SUMMIT 2019