How to Include Charitable Giving in Your Financial Plan
Are you someone that would love to give more but just haven’t found the time? Do you catch yourself giving at the end of the year, be it because the holiday season motivates or the year-end tax deadlines draw near? You wouldn’t be alone, nearly 1/3rd of giving happens in December annually. But charitable giving does not have to come with the jingle of sleigh bells and snow, instead, it can be folded into your yearly budget. The beauty of charitable giving is that it isn’t exclusively for the ultra-rich philanthropist set either. Philanthropy can be for everyone, regardless of tax bracket. In this article, we will go over some tips on how to make giving a part of your routine.
Giving is Good for You
Did you know that charitable giving can actually be good for you? It’s true! Studies have shown that the act of giving, activates pleasure centers in the brain more than receiving a gift or buying yourself something. Charitable giving also helps us to feel more involved in our world and community. But where to start? The first step to creating a giving plan is to decide where your donations should go. This is a wonderful opportunity for you and your family (as this can be a great teaching tool for younger generations) to explore your values and what you find important. You may be animal lovers and so, a local shelter or a large non-profit animal rescue may be a good fit. You may have a passion for the environment, for education, for arts programs or for helping the poor. Whatever it is, once you know what you want your contributions to go toward, you can move along to ways to give.
If you’ve decided the best way to donate is monetarily, the next step is making sure that your donation is going toward an IRS approved charitable organization. The IRS provides a search engine to check the status of the non-profit or charity https://www.irs.gov/charities-non-profits/tax-exempt-organization-search. It’s important to check before making a donation because, unfortunately, there are a lot of scams out there designed to prey on charity and kindness. This is especially true surrounding natural disasters or relief funds, so before you give anything, always do a little research to make sure that your dollars will really go where they claim to. Other giving strategies are to avoid donating cash, instead, using a more traceable currency like a check and always get a receipt. One of the most flagged as suspicious tax deductions is charitable giving by the IRS.
Stocks or Life Insurance Policies
Did you know that instead of donating funds from cashed in stock, which you have already had to pay taxes on, you could donate the securities themselves? This way the charity receives a larger donation and you get a nice tax benefit, as well as further diversifying your portfolio? This can only be done with securities in a non-registered account, so doing a little research and talking to your financial advisor or accountant is a good next step to explore your options. If you own your insurance policy, another option would be to gift either your policy or your benefit. If you gift the policy, the charity will become the owner and the beneficiary of the policy when you pass away. The charity provides the donor with a receipt and the donor continues to pay the premiums. This is a good tax strategy for someone who wants the tax benefits sooner rather than later. The other option is to donate the benefits, so the donor maintains ownership and continues to pay the premiums, but the benefit (or partial benefit) will go toward the charity. With this donation, the donor will not receive the tax benefit until after they die.
Another way to donate, which often can be as valuable as cash, is to volunteer and donate your time and skills. Volunteering is good for us, studies have shown people who volunteer often experience greater overall life satisfaction. It makes us feel good and helps build stronger ties to the community and world. People who volunteer, especially late in life, often report feeling more connected and healthier. We all hold within us a lifetime of learned skills and experience and so many wonderful organizations need help and sweat equity. Volunteering is something a family can do together and instills the value or helping and being part of something bigger. Like any sort of charitable giving, the first step to volunteering is narrowing your options to what and where you can help. Organizations like https://www.volunteermatch.org/can help streamline the process of finding the right place for you.
At the end of the day, charitable giving and volunteering help others. Charitable giving is also good for us. It’s a win/win and if you are interested in giving, make it a priority and find causes that you feel passionate about. It’s a wonderful value to pass on to your children and grandchildren.