It’s the Holiday Season—the Season of Giving—but often the logistics behind our philanthropic intent can be complicated and time-consuming. And with so many worthy recipients, even deciding where to give our resources can be a daunting task. But we don’t let that stop us. Americans’ charitable giving is the largest in the world; exceeding $484 billion in 2021 according to the Giving USA Foundation™ Annual Report, with 67% of those contributions, or $326.87 billion, coming from individuals just like you and me.
Giving from the heart and to causes you feel personally called to support is a worthy endeavor. Here are a few helpful tips to make your charitable giving more impactful:
Pro Tip No. 1: Give on your schedule, not the charity’s.
There are many ways to reap the tax benefits of end-of-year charitable giving without forcing yourself to put a 12/31 deadline on your calendar. One easy way is to set up a Donor Advised Fund (DAF). DAFs 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 those gains. (Consult with your financial advisor or CPA for specifics).
Pro Tip No. 3: Do a little research.
There are many resources offering valuable insight into the way charitable organizations spend their donated dollars—some are much better than others in terms of what percentage of your dollars goes to their mission versus their administrative costs. If you want to know more about how your donation is being used, you can dig a little deeper using a site such as Charity Navigator, GuideStar, or Wise Giving Alliance to see how a nonprofit is rated and how much of your donation will go toward their mission.
Pro Tip No. 3: 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? Keep in mind that over 85% of donations go to churches, alma maters, civic organizations, and such. Less than 14% go to human service charities that provide food, shelter, youth support, disaster relief, and other services.
Pro Tip No. 4: Don’t micromanage.
Telling a charitable organization that you want your gift to go to a specific area can handcuff the nonprofit. If you’ve chosen a great charity to share your resources with, trust them to solve the problem.
Pro Tip No. 5: Help the charity help themselves.
Ask the organization 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.
Pro Tip No. 6: Focus.
Writing multiple $50 checks to multiple charities may feel good to you, but giving larger donations to fewer organizations can actually do much more. Fundraising is a major cost to charities, so larger gifts are much more efficient for them to receive.
Pro Tip No. 7: 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 can help you with your decisions. Start with the causes you want to support (arts, education, etc.), then narrow it down by location (community, national, international, etc.) and finally find the best charity whose mission meets those goals.
Pro Tip No. 8: Family philanthropy.
Share the joy of giving with your children, and even your grandchildren! Whether you volunteer at the Food Bank or donate money to the United Way, explain why you do these things. You can build a “team spirit” by choosing a charity together, as well as learn financial accountability by budgeting for donations. Be a role model for your entire family and show why these values are so important in your lives.
Happy Holidays and Happy Giving!