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Charitable Giving Strategies for Year’s End

Maximize your impact on the causes you care about with these effective year-end charitable giving strategies.

Simple Steps to Make the Most of Your Generosity

As the year draws to a close, many people are not only planning for the holidays and reflecting on the past year but also feeling inspired by the spirit of giving that comes along with this time of year.

Year-end charitable giving is a tradition that allows individuals and organizations to harness the spirit of the holidays and make a positive impact on causes they care about. Whether you’re motivated by the spirit of giving or looking for strategic ways to maximize your impact, this article will explore various charitable giving strategies for the year’s end.

#1. Year-End Charitable Giving: Incorporate Your Philanthropic Goals into Your Budget

This time of year, so many causes pull at our heartstrings. The temptation to give away as much as possible can be intense – almost like the opposite of impulse buying. However, it’s crucial to ensure that your charitable giving doesn’t compromise your financial security, no matter how compelling the cause may be. Remember that charitable contributions are irreversible; once you’ve contributed your funds, there’s no getting them back. So, protect your finances by incorporating philanthropy into your budget as a dedicated category. This not only allows you to prioritize your generosity but also establishes limits to safeguard your financial stability, preventing you from exceeding your true financial capacity.

#2. Year-End Charitable Giving: Determine Your Values and Motivations for Giving Back

The list of charitable causes and worthwhile organizations seeking financial support can be overwhelming, making it challenging to decline any of them. However, to truly achieve the impact you want, it’s essential to make deliberate choices and prioritize only a select few – you can’t help everyone.

Taking the time to create a list of values that resonate with you and aligning them with an overarching mission for your charitable giving will provide you with a roadmap for navigating the philanthropic world. It also allows you to acknowledge that, while every charitable endeavor is valuable, it’s perfectly acceptable to stay faithful to your own passions and principles, even if it means saying ‘no’ at times.

SEE ALSO: Six Ways to Maximize Your Charitable Giving Impact

Even after narrowing down your values and defining your mission, the sheer number of available options can still be overwhelming. So, be sure to take time to research organizations before making a commitment. To aid in your decision-making process, consider the following factors:

  • Program Expenses vs. Administrative Costs: Assess the organization’s financial transparency. How much of their funds are allocated to programs that directly support their mission, and how much goes to administrative expenses?
  • Organizational History: Examine the organization’s track record. Is it a newly established entity, or does it have a long-standing presence in its field?
  • Reputation and Community Standing: Research the organization’s reputation within its community. What do people and other stakeholders say about its impact and integrity?
  • Trust and Alignment: Evaluate how much you trust the organization’s leadership and whether their vision for the future aligns with your personal goals and motivations.

To help you with your research process, there are an abundance of online resources like Candid, Charity Navigator, and the BBB Wise Giving Alliance that can aid you as you explore these factors.

#3. Year-End Charitable Giving: Explore Tax-Advantaged Giving Options

Year-end charitable giving doesn’t have to just be about generosity, though that’s certainly a main point. It can also be a strategic financial decision, and that doesn’t take away from your charitable impact in any way. Taking advantage of tax incentives is smart; it can help maximize the impact of your donations and give yourself a gift, as well. Some tax-advantaged giving options include:

  • Donor-Advised Funds (DAFs): DAFs allow you to make a lump-sum contribution and recommend grants to specific charities over time. You receive an immediate tax deduction when you contribute to the fund, and it can be a powerful tool for spreading your giving over the long-term.
  • Qualified Charitable Distributions (QCDs): If you’re over 70 ½ and have an Individual Retirement Account (IRA), you can donate up to $100,000 directly to a qualified charity. These donations are not counted as taxable income, potentially reducing your tax liability, and they satisfy your Required Minimum Distribution limits.
  • Appreciated Securities: Donating appreciated stocks or other assets offers potential advantages for both charitable gifting and tax efficiency. This approach helps donors avoid capital gains taxes for selling the investment. Instead, the investment is given directly to the charity.
  • Charitable Remainder Trusts (CRTs): A CRT allows you to donate to a trust that pays an income stream to you or your designated beneficiaries. After a specified period or upon your death, the remaining assets go to the charity of your choice.

SEE ALSO: ESG Investing Part One: Aligning Your Portfolio with Your Values

#4. Year-End Charitable Giving: Volunteer Your Time and Skills

Charitable giving isn’t limited to monetary donations. If your budget is already set, volunteering your time and skills can be just as valuable as making a monetary donation. Many organizations rely heavily on volunteers to support their missions, and your expertise could make a significant difference. Donating your time can also be a meaningful way to connect with the causes you care about.

#5. Year-End Charitable Giving: Make it a Family Affair

Money impacts every aspect of life, so it’s important to have open conversations with your family and friends regarding financial matters. Engaging in discussions about family philanthropy can serve as a powerful means to impart the cherished money values you hold onto your children and grandchildren. While philanthropy, much like any financial subject, may seem deeply personal, the act of sharing your convictions can pave the way for meaningful connections and the potential for united, impactful initiatives.

Final Thoughts on Year-End Charitable Giving

Charitable giving is a powerful way to make a positive impact on the world while also enjoying potential tax benefits. By being intentional and thoughtful with your philanthropic efforts, you can maximize the effectiveness of your donations. Whether you choose to donate money, time, or expertise, your generosity can create a better future for those in need and leave a lasting legacy of compassion and support in this holiday season and beyond.

If you would like to discuss how to give with more intention and in a way that supports a smart financial strategy, let’s talk! At Arbor Capital, we proactively seek out opportunities to align our clients’ financial plans with their personal values. Give us a call today and let’s begin a conversation about how we can build you a strategic giving plan that makes the most of your generosity and works with your larger financial plans. We look forward to hearing from you!

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