For many people, charitable giving is a financial value they hold dear. In fact, data from Philanthropy Roundtable has shown that two-thirds of Americans give money to charitable organizations annually. If philanthropy is important to you, below you’ll find six ways to get the most out of your giving.
1. Spend Time Identifying the Causes that are Most Important to You
There are many meaningful ways to support people and organizations in need, but your resources are finite. This means being deliberate about where your charitable dollars are going. Make a list of all the organizations you’ve previously given to, then consider which are most important to you at this stage of your life. In doing this, you can ensure that your philanthropy fully aligns with your values.
2. Consider Consolidating Your Gift
Contrary to investing, diversification isn’t always a good strategy when it comes to giving. Rather, consolidating some of your giving may lead to greater impact. Focus on giving to a few key charities that most closely align with your core values. For example, if education is one of your key values, you may choose to focus on giving to educational organizations or to your alma mater. In most cases, you will have more satisfaction and impact when you can focus on the nonprofits that mean the most to you instead of responding to every fundraising request that comes in the mail.
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3. Involve Your Family
Giving can become part of your family tradition if you make an effort to involve your family in the giving process. First, have a family meeting that allows the kids to participate in your philanthropic decisions. In addition to instilling the giving spirit early, this meeting provides an opportunity for family members to share individual perspectives about which causes are most important to them. Family members can develop their own traditions over time, including pooling money together, rotating the selection process for charities, and/or establishing a gift fund for kids to give from. Regardless of the dollar amount or organization selected, involving the family in the giving process will have long-term effects on your family and the charities they choose to give to.
Learn More About Charitable Giving with The Flourish Financially Challenge
4. Look Beyond the Numbers
Giving doesn’t always have to be a financial gift. It can also be more about where you spend your time than where you spend your money. Donating your time may even make you feel more connected to an organization than if you gave the same organization money.
5. Do Your Research
Once you know which causes best match your charitable giving goals, find the best charities to give to. Start by looking at the mission of the organization to ensure it aligns with your giving intentions. Next, look at the finances and general management of the organization, specifically what percentage of your donations will be absorbed by general management relative to how much will go toward the underlying cause. Online resources including Charity Navigator, CharityWatch, Charities Review Council, and Guidestar are helpful.
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6. Maximize Your Gift
Now that you (and potentially your family) have gone through the process of selecting where your charitable giving will go, it’s important to follow a few steps in order to maximize your gift. First, give directly. Many charities pay professional fundraisers from 40 to 80 percent of the proceeds received. Avoid donating to solicitors over the phone and give directly instead. In addition, try to avoid using credit cards to make your donation. Charities often pay 3 percent to five percent in credit card fees, immediately reducing the desired impact. Many employers also have matching programs that can be used whenever possible to increase the value of your gift.
Finally, consider using appreciated assets as either a direct gift or through a donor-advised fund to incorporate additional tax savings. Donor-advised funds are an important tool to consider in your philanthropic efforts because they provide a flexible way to make a charitable contribution with cash or appreciated securities while taking a full tax deduction at the time of the gift. Then, you can easily make ongoing gifts to the organization of your choice.
Final Thoughts on Maximizing Your Charitable Giving
If you feel called to use your wealth, time, or talents to support organizations and causes that are meaningful to you, start the process at a level you’re comfortable with and use the tips above to maximize your impact. While it’s certainly tempting to give to many organizations, be intentional about your choices and only give when you already feel secure about your own financial future.
If you’d like to discuss making charitable giving part of your financial plan, please reach out to us today. You’ll also find additional information in my book, Flourish Financially, where I discuss the above tips and much more.
