“I think if you’ve done well in this country, it’s pretty churlish for you not to at least be willing to give a pretty good portion of that back to the public interest. And all this is in the great tradition of American philanthropy.” This is a quote from Fred Smith, the founder of FedEx, created in May 1971 as the “Federal Express Corporation”. This impactful statement helps give us a sense of Fred Smith’s noble character and passion for community service and philanthropy, but it also speaks to the importance of charitable giving in the lives of the wealthy, and just how much Fred Smith understood, as a businessman, the power of legacy.
Who Was Fred Smith?
Smith, who recently passed away on June 21st, 2025 at the age of 80, was known for verifiably changing the game in the world of commerce, business, and transportation. By combining innovative military-informed management techniques, and an insightful forecast of logistical tracking and shipping system needs, Smith was able to take FedEx, which originally started as a topic for an undergraduate paper, off the ground, so that it could thrive as a successful conglomerate well beyond its date of founding, and even after he transferred from his role as CEO of the company in 2002 to executive chairman.
A Legacy of Giving
Not only was he a well-decorated Vietnam War veteran and highly successful businessman, but he was also quite well-known for his philanthropic efforts. While he did serve on the board of a number of charities, like the Mayo Foundation and St. Jude Children’s Research Hospital, most of his contributions were in support of the city of Memphis, which serves as the headquarters of FedEx. Smith’s charitable giving helped support the Memphis Zoo and the University of Memphis, among others, causing him to be named as the city’s “most important citizen” by U.S. Representative Steve Cohen of Tennessee. He was also passionately grateful for the U.S. Marine Corps that trained him as a young man, and prior to his death, had announced that he would be gifting the Marine Corps Foundation with a new endowment for a scholarship.
What Can Fred Smith’s Philanthropic Habits Teach Us?
Smith’s consistent charitable donations provide a few insights into how successful business owners can make good use of their finances both in terms of social impact and financial security.
First and foremost, they are an important reminder that, if there is a cause you as an individual are passionate about, you have every right to set aside your hard-earned business money and support it! Secondly, it’s an important business tool: charitable giving, whether done during your lifetime or through specific estate planning methods, can help set your family and yourself up for success, by securing important tax benefits and income tax deductions.
While Fred Smith was notoriously private about the nature of a large portion of his donations, charitable giving does not have to be a mysteriously complex process. There are a number of ways that business owners can make space for the causes they care about in their estate planning in a way that also serves the best interests of their family in terms of taxes:
- 1. Establishing a Charitable Lead Trust (CLT)– CLTs are essentially two-pronged irrevocable trusts: you set it up as a way to provide funds that go toward a charitable cause, and then, if set up during your lifetime, any remaining funds go to any non-charitable beneficiaries you’ve designated (like your children) as a taxable gift. However, if the trust is funded at the time of your death, it is subject to estate tax, so planning ahead is a vital step!
- 2. Establishing a Charitable Remainder Trust (CRT)– CRTs, on the other hand, are irrevocable trusts that do the OPPOSITE of what CLTs do. During a set period of time, these trusts allow for a steady income stream for yourself or another beneficiary, with any remaining funds going to charity. If you yourself are the beneficiary, any investment income you have is tax-exempt, but any distributions to make to other beneficiaries may be taxed. The good thing about CRTs is that they also defer capital gains tax.
- 3. Using a Donor-Advised Fund (DAF)– a charitable fund specifically designed to pass designated assets to a specific public charity at the time of your death, a DAF can allow you to donate to your most valued causes in a way that lasts beyond your lifetime, while also leaving the tax benefits usually received immediately for lifetime gifts to your estate in the future.
- 4. Writing charitable contributions into your last will and testament– this is the simplest way to ensure that the amount of money that you want given to a particular charity is faithfully distributed according to your wishes. However, this is not sufficient if you are trying to avoid taxes, and it does not set up additional safeguards the way some of the above strategies would.
At Trust Counsel, We Can Help You Give the Smart Way
You may be busy running an important business, but that does not mean you should have less time to contribute to the social causes you are most passionate about. Just like Fred Smith, you can balance smart business tactics and long lasting social impact- and Trust Counsel can help you achieve both. Call us today, and make the first step toward building your legacy.