In recent months, global markets have entered a period of significant divergence. U.S. equities, long the bellwether of global investor sentiment, are struggling under the weight of high valuations and policy uncertainty. In contrast, international equities have shown surprising resilience. Meanwhile, Bitcoin is stepping out of its speculative shadow, and private equity is confronting a long-overdue reckoning. These three themes—international outperformance, digital hard assets, and illiquidity risk—are reshaping how we think about asset allocation in the years ahead.
International Outperformance: A Quiet Shift Takes Hold
One of the most underappreciated developments in 2024 has been the strength of international equities. While U.S. indices such as the S&P 500 have dipped into negative territory, markets like the Hang Seng Index in Hong Kong and the DAX in Germany have remained in solid uptrends. These international indices have weathered the volatility with far greater composure than their U.S. counterparts.
This divergence is not just about market momentum. It reflects deeper structural dynamics: a weakening U.S. dollar, more favorable valuations abroad, and a relative lack of exposure to the large-cap tech names that dominate and increasingly weigh on U.S. benchmarks. In this environment, our approach has been to reduce exposure to broad U.S. indices and reallocate incrementally toward international opportunities—particularly in markets with strong trendlines, solid fundamentals, and better risk/reward setups.
Investors tend to overweight their home markets, but global leadership rotates. With many U.S. equities stretched and speculative fervor concentrated in a narrow slice of tech stocks, international diversification isn’t just prudent—it may well be necessary.
Bitcoin: From Toy to Treasury Asset
While the broader market has been under pressure, Bitcoin has quietly made historic gains. The digital currency recently hit an all-time high when measured against equities, signaling a structural shift in how it is perceived.
Bitcoin is no longer just a speculative playground for tech-savvy traders. It is increasingly acting like a digital counterpart to gold: a decentralized, non-sovereign store of value. Amid global monetary uncertainty and rising concerns about fiat debasement, the case for Bitcoin as a strategic asset allocation tool has grown stronger.
Price action confirms this shift. Bitcoin is breaking out not just in dollar terms, but relative to traditional assets like stocks. This breakout from a long base pattern suggests the beginning of a new structural uptrend. It doesn’t mean Bitcoin is without risk—volatility remains high—but the asset is showing signs of maturation. For investors willing to tolerate drawdowns in exchange for asymmetric upside, Bitcoin has become increasingly difficult to ignore.
Private Equity: A Liquidity Reckoning Unfolds
If Bitcoin represents a new frontier, private equity is a cautionary tale. After a decade and a half of exuberant inflows, the private market ecosystem is showing signs of strain. Endowments and large institutions are quietly exploring secondary sales. Discounts are widening. Illiquidity—once sold as a feature—is now looking more like a bug.
The core issue is twofold. First, the promise of an “illiquidity premium” has not materialized for many investors. Returns have lagged, and recent IPOs of private equity-backed companies have underwhelmed. Second, in an environment of rising uncertainty and shifting priorities, being locked into opaque and inflexible structures is increasingly unattractive.
What we are witnessing is the start of a broader reassessment. Liquidity, once taken for granted, is being revalued. Investors are recognizing the importance of being able to adapt, pivot, and access capital when it matters most. This is especially critical in a world marked by geopolitical shifts, technological disruption, and policy unpredictability.
Our view has been to emphasize a barbell approach: favor public, liquid markets where price discovery and flexibility are real, while reserving private allocations for only the most compelling, early-stage opportunities—where idiosyncratic returns justify the trade-off. The days of blindly allocating to mega-fund buyouts and late-stage private credit are, in our view, numbered.
The Road Ahead: Rethinking Risk and Reward
The investment world is changing. The old playbook—which prioritized U.S. dominance, low volatility, and institutional orthodoxy—is no longer sufficient. Today’s conditions demand new thinking.
International markets are quietly asserting leadership. Bitcoin is maturing into a meaningful strategic asset. And the cracks in the private equity model are becoming too large to ignore.
It’s not about abandoning tradition, but rather updating assumptions. Flexibility, liquidity, and diversification—real diversification—are taking center stage. And for investors willing to step back and reassess, this period of transition offers rare opportunities to get ahead of the next structural cycle.
If you’re interested in learning more about Bespoke’s approach to private wealth management and how we can help you build a secure financial future, we invite you to reach out to us directly. We’d be happy to set up a confidential consultation at your convenience.
Thank you for considering Bespoke as your partner in wealth management. We look forward to the opportunity to work with you.
This information is intended for general educational purposes only and should not be construed as legal or investment advice.
In the previous article, “How to Align Passion with Impactful Giving“, we discussed the fundamental aspects of philanthropic giving. In this article, we take a closer look at the different ways to structure charitable gifts and the advantages of each structure. We’ll start by discussing the role of foundations.
Conduit and Operating Foundations
Private foundations provide many of the same benefits of public charities if they are structured and administered as a conduit foundation or as an operating foundation.
A conduit foundation must distribute 100% of all property contributed to it before the end of the first quarter in the year following the contribution. For example, if you contributed $1,000,000 to a conduit foundation in 2024, the foundation would have to distribute that entire amount by April 15, 2025. Conduit foundations generally only make sense for benefactors who do not want to be directly involved in ongoing charitable activities, and who have several known public charities to which they want to distribute large amounts.
By contrast, an operating foundation does not just award grants; it is actively engaged in providing services that advance the tax-exempt purposes of the foundation. Although operating foundations require higher administrative commitment and overhead, they provide more beneficial charitable deduction opportunities for donors as well as additional flexibility and control. Private operating foundations may also create opportunities for family members to receive reasonable compensation for services they provide to the foundation.
The classification of a private foundation is determined on a year-by-year basis based on the foundation’s activities. In some years a foundation may be treated purely as a “private non-operating foundation” subject to the lower deduction limits and excise tax mentioned above. In other years the private foundation may be managed as a “conduit foundation” if it meets the 100% distribution test. And in other years it may qualify as a “private operating foundation” if it meets a specific two-prong qualification test discussed below. The key is to strategically manage the foundation’s investments and activities in a way that allows it to qualify as an operating foundation – at least in years that are most advantageous.
Private Operating Foundations
The most complex type of private foundation is a private operating foundation. If a private foundation satisfies both parts of a two-prong qualification test, it will be deemed to be an operating foundation. The first prong of the test is a mandatory income test that requires the foundation to spend at least 85% of the lesser of the foundation’s (1) adjusted net income (which does not include long-term capital gain income or contributions made to the foundation) or (2) its minimum investment return, on the “active conduct” of charitable activities. If the foundation does not meet the income test in a given year, it will not be treated as an operating foundation for that year regardless of any other test.
If the income test is met, then the foundation must also satisfy at least one of the following additional tests:
Assets test – At least 65% of the foundation’s assets are devoted to the direct conduct of tax-exempt activities; or
Endowment test – The foundation distributes at least 2/3 of its minimum investment return in the active conduct of its tax-exempt activities.
The foundation may meet the assets test in some years, and the endowment test in other years. It must meet the income test every year. In each prong of the qualification test, expenditures and distributions must be made in ways that advance the exempt activities of the foundation itself, rather than through grants to other individuals or organizations.
Defining “Active Conduct” for the Qualification Test
The following are general examples of expenditures and grants that may qualify as “active conduct:”
Amounts paid or set aside to acquire or maintain assets used directly in the foundation’s exempt activities.
Reasonable administrative expenses such as salaries, travel expenses, and other operating costs necessary to conduct the foundation’s exempt activities.
Grants made as part of an active program in the foundation.
Grants made with continuing supervision by the foundation (and with the grant recipient reporting back to the foundation).
Tax on an operating foundation’s net investment income may be treated as a qualifying distribution.
By contrast, administrative expenses and operating costs that do not directly advance the foundation’s tax-exempt purposes do not constitute qualifying distributions.
As the above discussion demonstrates, private operating foundations are complex, but where you wish to fund a cause that is not being adequately addressed by other existing charities, a private operating foundation may be your best choice.
Private Non-Operating Foundations
A private non-operating foundation is a charity that primarily functions as a grant-making entity; i.e., it primarily makes grants to other charities rather than conducting its own operations. Like operating foundations, non-operating foundations are typically funded by an individual or single family.
Private non-operating foundations must annually distribute at least 5% of their net investment assets for charitable purposes, and their investment income is subject to a 2% excise tax. Moreover, when funding a non-operating foundation, you can deduct up to only 30% of your adjusted gross income for cash contributions, 20% for non-cash contributions (e.g., appreciated stock). Significantly, you can carry forward unused deductions for up to five additional years (i.e., six years total). Conversely, with a contribution to a conduit or operating foundation (or any direct contribution to a public charity), you can deduct up to only 50% of your adjusted gross income for cash contributions, 30% for non-cash contributions.
Donor Advised Funds
A popular alternative to non-operating foundations is the Donor Advised Fund (DAF). DAFs are separately identified accounts maintained and operated by public charities, known as sponsoring organizations. Once the donor makes the contribution, the sponsoring organization has legal control over it. However, the donor, or the donor’s representative, retains advisory privileges with respect to the distribution of funds and the investment of assets in the account. Significantly, the donor requests that the sponsoring organization make a distribution, but the sponsoring organization retains the right to deny that request.
DAF assets can be invested and grow tax-free, potentially increasing the amount available for charitable grants. With a DAF, the donor receives an upfront charitable deduction for the amount contributed to the DAF (using the higher deductibility limits), even though the funds may not be distributed to charity for some time. In fact, this benefit has caused DAFs to recently come under scrutiny in Congress, with recent proposals requiring a minimum annual payout and maximum term before all funds must be distributed to charity.
Benefits of Giving Appreciated Assets
Donating appreciated assets, such as marketable securities, provides unique benefits to both the donor and the receiving charity. With a contribution of marketable securities, you will receive a tax deduction for the current fair market value of the stock and any public charity can easily sell the stock, convert it to cash, and not pay any tax. By donating the marketable security itself, as opposed to selling the security and donating cash, the donor may avoid capital gains tax on the sale of the security and receive a charitable deduction, while the charity receives the full value of the security.
Structures for Making Charitable Gifts
As discussed above, a Donor Advised Fund is one structure through which charitable contributions can be made but it may have some limitations. Some DAF sponsoring organizations permit the contribution of other types of appreciated assets, such as real estate or digital assets such as bitcoin. However, not all sponsoring organizations will accept these assets, and with few exceptions, most DAFs will require the sale of these assets upon contribution. Thus, it is imperative that you communicate with the DAF sponsoring organization to ensure it will accept the asset(s) you wish to contribute and/or, that it will hold the appreciated assets for some future sale date.
Capital Gains Deferral Trust
Rather than giving appreciated assets directly to a charity or DAF, another option is to give those assets to a specific type of charitable trust, recognized and accepted by the IRS, that can then sell the assets and not pay the tax. As a result, the full value of the appreciated assets can then be invested.
The trust then pays a fixed percentage, typically to you and/or your spouse for life, based upon the value contributed. At the end of that term, the remaining balance is paid to the charity or charities of your choice.
With this strategy you receive an income tax deduction for the present value of the hypothetical amount going to charity, and the assets are protected from your creditors and are outside of your estate for purposes of the estate tax. This is an excellent way to give to charity in the future, while providing you a tax-deferred income stream now.
For example, suppose as a Colorado resident you own Microsoft stock worth $1 million with zero tax basis. Thus, if you sold the stock today, you would pay $200,000 in federal capital gains tax (20%) and $43,300 in Colorado capital gains tax (4.33%), netting you $756,700. (In all likelihood, the net investment income tax would also apply, further reducing your net by 3.8%.)
If instead you transferred the stock to this type of tax-deferral trust, the trust would sell the stock and have $1 million to invest. There are several options but with the most common type, the trust would pay you (and your spouse, if any) a fixed annuity (say 5%) for your lives. Thus, you would receive $50,000 per year for the rest of your lifetimes(s), subject to tax.
Annuity to Charity Trust
Another option is to contribute assets to a different type of charitable trust–one that pays an annuity to charity for a specified number of years and then transfers the remaining trust balance to your heirs.
This type of trust is perfect to establish a long-term charitable giving strategy during your lifetime (for example, if you want to contribute $x to your favorite charity for the next 20 years).
And under certain circumstances, this trust can even provide you with an upfront income tax deduction for the present value of the annuities paid to charity. Additionally, assets within this type of irrevocable trust are protected from creditors and free of gift or estate tax.
Distributions Directly from Your IRA
If you are over 70 1/2, you can distribute directly to charity up to $100,000 per year from your IRA or qualified plan. This reduces or eliminates your required minimum distribution by the amount of the direct charitable contribution (up to $100,000) and, significantly, removes the direct charitable contribution from that year’s taxable income, thereby reducing your taxable income by the amount of the direct distribution to charity, up to $100,000. For example, if your required minimum distribution is $85,000, rather than taking that distribution and turning around and making a cash contribution to charity, consider making the distribution directly from your IRA. By making a direct contribution from your IRA, the $85,000 will not be included in your taxable income, thus reducing your overall taxable income.
Conclusion
Charitable giving is a dynamic process with many different strategies that can be levered to achieve a lasting impact and bring additional meaning to your legacy. The Bespoke Group provides strategic guidance at every step—helping you craft a personalized giving strategy that reflects your values, ideals, and passions. We work closely with you to ensure your philanthropy drives meaningful impact in the areas that matter most.
If you’re interested in learning more about Bespoke’s approach to private wealth management and how we can help you build a secure financial future, we invite you to reach out to us directly. We’d be happy to set up a confidential consultation at your convenience.
Thank you for considering Bespoke as your partner in wealth management. We look forward to the opportunity to work with you.
This information is intended for general educational purposes only and should not be construed as legal or investment advice.
The most meaningful philanthropy starts with a clear ‘why.’ For wealth holders, aligning giving with personal values and long-term vision is essential— not optional. This two-part series offers a blueprint for effective, values-driven philanthropy. In this first installment, we help you define what matters and where to begin. The second, “How to Structure Your Charitable Giving“, will provide a more detailed outline of various types of giving structures and alternative assets that can be gifted.
Identify Your Passion Causes
Some individuals come to us with fully formed views on philanthropy. Others have no idea how they should start their philanthropic journey. For this latter group in particular, the conversation often starts with the following question:
“Assuming a perfect world without limitation, what causes are you passionate about?”
Once you’ve defined these core causes, the question then becomes, “how can you best connect your philanthropy to these causes?”
Unsurprisingly, many individuals have limiting beliefs about their ability to make an impact on the causes they care about. These beliefs include thoughts like: my cause is too large or, conversely, my cause is too small; I don’t have the resources to impact my cause; my cause is too difficult to impact; impacting my cause requires disclosing my identity; etc.
In some cases, these limiting beliefs may reflect objective challenges, but more often, they are based on subjective perceptions. For example, one of our clients is deeply passionate about addressing racial and gender inequality, two massive issues that seem insurmountable, even with unlimited resources. However, through several conversations with various experts, the client learned that human trafficking is a socio-economic issue that disproportionately impacts women and people of color. This insight lead the client to address human trafficking in a particular region close to home by funding a center for victims of human trafficking. Today, that center serves a significant numbers of victims daily, making a meaningful impact on the community.
Another client couple is passionate about their church, a relatively small denomination with diocese in only a handful of U.S. cities. Given the small size of this church, the clients require absolute anonymity in making large contributions to their church. Through the assistance of a philanthropy consultant, we ensured total anonymity with their contributions. Further, after numerous conversations we determined that multiple smaller contributions over many years would likely have a much greater impact than a fewer number of large contributions, given the relatively small size of the endowment – and vision – of the church.
Once we align the client’s passion causes with potential philanthropy, we then explore the many ways in which the client can approach that philanthropy from a structural perspective. The first question is, are there charities that are addressing this cause, or does the client need to create a charity to address it? From there, we discuss various types of private foundations and their best use case to fit the client’s objectives.
Private Foundations Generally
At the risk of oversimplifying, there are three general classifications of private foundations: 1) private non-conduit, non-operating foundations, 2) private “conduit” foundations, and 3) private operating foundations. Of these, conduit and operating foundations enjoy many of the same benefits that public charities provide. Non-operating, non-conduit private foundations provide lower levels of deductibility and are subject to additional layers of tax at the entity level.
Private foundations are an excellent tool for managing the family’s philanthropy and incorporating younger family members into family wealth decision making. It should be noted, however, that private foundations are complex with significant regulations and administrative costs, and they are therefore not right for every family.
Ways to Give: Cash and Appreciated Asset Contributions
Cash contributions provide the immediate liquidity to fund charitable operations and thus are vital to many charities. Cash contributions also provide the highest level of deductibility against your adjusted gross income. However, there are other ways you can give . . . which may be advantageous to you from a tax perspective and may allow you to incorporate giving to your passion causes as part of your estate planning.
Rather than donating cash or a check, consider contributing appreciated assets such as marketable securities, which include stocks, bonds or certificates of deposit. Contributing appreciated assets provides additional flexibility and tax advantages when implemented within the correct structure.
Conclusion
A meaningful philanthropic journey begins with clarity of purpose—identifying the causes that matter most and aligning them with a strategy for impact. From there, the focus shifts to execution: how to channel resources effectively, and which vehicles— whether foundations, trusts, or donor-advised funds— are best suited to achieve that impact. This is typically an iterative process that sometimes takes place over many conversations, often over several months or longer. Further, one’s philanthropy is not static and may evolve and/or expand over time.
In this way, philanthropy can not only produce a significant impact, but it can provide tremendous meaning to those who engage in it. Many of our clients find unending joy knowing that they are truly making a difference. At The Bespoke Group, we take great pride in helping individuals and families find this joy.
If you’re interested in learning more, please read “How to Structure Your Charitable Giving” where we break down different types of foundations and trust structures, and how to identify what structure will best serve your values and philanthropic goals.
If you’re interested in learning more about Bespoke’s approach to private wealth management and how we can help you build a secure financial future, we invite you to reach out to us directly. We’d be happy to set up a confidential consultation at your convenience.
Thank you for considering Bespoke as your partner in wealth management. We look forward to the opportunity to work with you.
This information is intended for general educational purposes only and should not be construed as legal or investment advice.
Authored by Jacob Shapiro, Head of Geopolitical & Macro Research and Senior Client Relationship Manager at Bespoke Group
I know how worried the average person is about market volatility and geopolitical issues when random people in my life ask me some version of, “So what do you think is going to happen?” This morning, I was at my daughter’s school, where I thrilled her class with a riveting reading of The Serious Goose. Afterwards, I helped her build a castle made of blocks whilst wearing a tiara — as one does. While we were building, a teacher started asking me about my opinions on President Trump’s tariff policy and the impact it was having on retirement accounts.
The average person’s worried index is extremely high.
Is the Trump Administration Bluffing?
Open a news website, turn on television news, or — if you are truly brave — hop on social media, and you are greeted with doom and gloom: comparisons of recent market performance to the pandemic, the 2008 Great Financial Crisis, and even the Great Depression. These comparisons are not unreasonable, especially those to the Great Depression, which was likely made worse and longer by the 1930 Smoot-Hawley Tariff Act. If the Trump administration doubles down on its global trade war, the current market drawdown may appear in retrospect to be the early innings of a much longer game.
Which is why I continue to think the Trump administration is bluffing. The comparison is a legitimate one. The Trump administration does not want people like you to think that — it wants the world to take its tariff threats with deadly seriousness. When Kevin Hassett, the Director of the National Economic Council, posted on social media that President Trump was considering a 90-day tariff pause, the White House wasted no time shouting down the assertion as “fake news.” (Hassett has since deleted the post.) But if President Trump doubles down, what awaits him is an economic depression, a bloodbath in the midterms, and an ignominious place in U.S. history books.
At a certain point, it does not matter whether President Trump is bluffing or not. The haphazard, lazy, and mercurial (I use these descriptors objectively, not pejoratively) way the Trump administration’s tariff policy has been rolled out has already cast the dice: Any country that can lessen its dependence on the United States will do so — whether Trump walks back the tariffs or not.
Not all countries can do so. Mexico is celebrating that it wasn’t included on “Liberation Day” because the country remains, as Porfirio Díaz once said, “So far from God, so close to the United States.” Canada still has some reckoning to do. Japan has already reached out to the U.S. and agreed to cabinet-level tariff negotiations. But other countries — like China and Brazil, or the European states that make up the EU — will not take this medicine. They will self-amputate and enroll in physical therapy.
Key Data Points to Consider
Amidst the chaos, there are a few key data points to keep in mind:
From Reuters: “The European Union wants India to eliminate tariffs on car imports under a long-pending trade deal, and Prime Minister Narendra Modi’s government is willing to sweeten its current proposal to seal the talks… ‘The EU has come back asking for a better deal, and India wants to make a better offer,’ said one of the industry sources.” The EU is not turning back. It is embracing a multipolar world and pivoting quickly to establish better trading relations with potential markets.
Also from Reuters: “Several powerful Iranian-backed militia groups in Iraq are prepared to disarm for the first time to avert the threat of an escalating conflict with the U.S. Trump administration.” This comes on the heels of President Trump agreeing in principle to indirect talks with Iran in Oman over its nuclear program. President Trump likely wants to make a deal with Iran rather than start a war in the Persian Gulf.
China has taken off the gloves — retaliating with 34 percent reciprocal tariffs, potentially dumping U.S. Treasuries, devaluing its currency, front-loading fiscal stimulus, and exhorting its people to “focus on doing your own thing.” But according to one commentator writing in The People’s Daily: “The sky will not fall,” and more importantly, China “did not close the door to negotiations with the U.S.” China had four years to prepare for a Trump presidency. It is ready for even higher tariffs than what have been announced… but it is also ready to make a deal with the Trump administration when the White House is ready.
Market Movements and What Lies Ahead
As I type this in the early afternoon of April 7th, the S&P 500 and the Nasdaq are back in positive territory. Bitcoin has pared its losses and is approaching $80,000. The yield on the 10-year Treasury is rising and closing in on 4.2 percent. The dollar is also climbing from its Liberation Day nadir. What happens next depends on the whims of a single man in the White House. If he doubles down on tariffs, the bottom could fall out. If something like the 90-day negotiation reprieve happens, a whipsaw is possible — or even renewed market confidence. My horoscope says it is crucial that I stand up and be a deciding force. It has as much predictive value as anything else in this paragraph.
Geopolitical methodology rejects thinking in such short time periods. I have no insights into what President Donald Trump is feeling or thinking about doing next. I have no one-size-fits-all strategy for my daughter’s teacher or for whoever is reading this. The short term promises to be volatile, unpredictable, and messy — and just how messy depends entirely on the decisions of a single person, which means there is an impossibly huge degree of variance in what is going to happen next.
The Long-Term Outlook
The long term, however, is clear — indeed, becoming clearer by the day. The U.S. will abdicate its role as leader and protector of a globalizing world. Supply chains, trading relationships, and alliances will be upended and remade. The U.S. will remain a powerful, wealthy, and influential country in the world… but global companies that profited from globalization will suffer, and the status of the U.S. dollar and U.S. Treasuries as safe havens will erode. It will be a time of national champions, of vertical integration, of technological and military competition, of scrambles for resources, markets, and advantage.
In other words, it will look a lot like the world usually looks when there isn’t a global hegemon — which has only happened twice in all history: the British Empire in the 19th century and the U.S. between 1990 and 2025. It is a reversion to the geopolitical mean. One can be forgiven for a sense of whiplash — the human mind is not hardwired to accept change easily, and multiple generations have grown accustomed to the present. But the geopolitics that is unfolding for all to see is not the aberration.
That was the last 35 years.
If you’re interested in learning more about Bespoke’s approach to private wealth management and how we can help you build a secure financial future, we invite you to reach out to us directly. We’d be happy to set up a confidential consultation at your convenience.
This information is intended for general educational purposes only and should not be construed as legal or investment advice.
