IMPACTFUL CHARITABLE GIVING
American charitable giving is the largest in the world, exceeding $350 billion per year given to more than 1 million charities: 72% of all giving comes from individuals with the combined giving of foundations, bequests, and corporations making up the remaining 28%.
Deciding how much to give and to whom is challenging at best. Many of us give because we are loyal, enjoying our symphony, supporting our religious organizations, supporting our alma maters or helping our communities. Emotional satisfaction is not to be undervalued.
Yet, according to a 2010 study conducted by the San-Francisco based Hope Consulting, two-thirds of all donors report doing no research at all related to their charitable giving. Giving from the heart is a worthy reason, but we encourage you to do a little research (Charity Navigator, GuideStar or Wise Giving Alliance are great online resources) to see how the non-profit is rated, how much of your donation will actually go towards fund raising vs. programs, etc.
Here are a few additional ideas to make your charitable giving more impactful:
Rule No. 1: Give on your schedule, not the charity’s
There are many ways to reap the tax benefits of charitable giving without forcing yourself to put a December 31 deadline on your calendar. One easy way is set up a Donor Advised Fund (DAF) at your local community Foundation or at many custodians like TD Ameritrade, Fidelity, or Vanguard. DAF’s allow you to reap the tax benefits in the year of your gift, but pass the cash to the charity on your own schedule in future years. You can use appreciated assets (stocks, mutual funds, etc.) and avoid paying tax on capital gains.
Rule No. 2: Impact giving: What impact will your donation make?
Will it be a drop of water in the ocean or will it really make a significant difference where you want it to? A significant percentage of donations go to churches, alma maters, civic organization and the like; with less charitable-giving to human service charities providing food, shelter, youth support, disaster relief, and other services. Where can your hard earned dollars do the most good? The chart below shows a distribution of the specific charitable giving sources:
Rule No. 3: Don’t micromanage
Telling a charitable organization that you want your gift to go to a specific area just handcuffs the non-profit. After you are confident you’ve selected a great charity, trust them to solve the problem.
Rule No. 4: Help the charity help themselves
Ask the charity how they prefer their donation to be given. Challenge grants, where the charity can leverage your donation with matching grants, can sometimes generate two or three times the dollars than a straight donation.
Rule No. 5: Focus
Writing $50 checks may feel good, but giving a few organizations $1,000 each may do much more good. Fund-raising is a major cost to charities, and larger gifts are more efficient for them to receive. The goal of philanthropy should be to preserve something of value or to improve something that needs to be changed, or both. A narrow focus on a few important causes enables donors to have a greater impact, derive more fulfilment, and become more personally invested in the desired outcome.
In addition to having a narrow focus, you can pool resources with others to have a deeper impact by creating a Giving Circle. A Giving Circle is where a group of individuals (your friends, family, neighbors, etc.) donate their own money or time to a pooled fund; decide together where to allocate resources, increasing their awareness and engagement in the charity or community project. Many circles, in addition to donating their money, also contribute their time and skills to support local causes.
Rule No. 6: Plan
Develop a personal giving plan. Many people give a percentage of their earned income each year to charity. Whether it is a percentage or a flat dollar amount, making a commitment at the beginning of the year will help you with your decisions. Start with the causes you want to support (arts, education, etc.), then narrow it down to location (community, national, international, etc.) and find the best charity whose mission that meets these goals.
Rule No. 7: Family philanthropy
Be a role model for your entire family. We have seen the benefits of family giving, and it can be extraordinary. Whether you work at the Food Bank or donate money to the United Way, explain to your children why you donate. You can all share the joy of giving, build a “team spirit” on choosing the charity, learn financial responsibility and accountability on budgeting for charitable giving, and share with your children (and even your grandchildren) some of the values you feel are important in your lives.
Rule No. 8: Evaluate and make changes as needed
As with any other area of your financial lives, it’s important to continue to monitor your giving plan and make changes as necessary.
- Do you have more or less than usual to give this year?
- Has there been a recent life event that influences the direction of your charitable giving?
- Is there an opportunity to make significant giving contributions with an upcoming taxable event?
- Where did you find success and failures with your past giving experiences?
There will be changing circumstances and unexpected events that may require you to continually learn and adjust your strategy – perhaps while it is being implemented.
Remember to leverage Willow Creek! We can play a significant role in the planning, implementation, and monitoring of your charitable giving goals – whether it be with your year-to-year giving, creating a long-term giving plan, or as part of your family legacy planning. We take great interest and satisfaction in learning about your charitable goals and can help guide you through these “8 rules” of impactful and effective giving.