Strategies for Making the Most Out of Your Charitable Giving
Money can be meaningful to us in multiple ways, and many people find joy and value in charitable giving. Recent data support this, as Philanthropy Roundtable has shown that two-thirds of Americans give money to charitable organizations annually. If philanthropy is a financial value that is important to you, check out these six ways to get the most out of your giving.
1. Know the Causes that are Most Important to You
Money isn’t the only meaningful way to support people and organizations in need, but your financial resources are finite. So, it’s important to be deliberate about where your charitable dollars are going. Try making a list of every organization you’ve given to in recent years, then think critically about which are most important to you at this time in your life. When you take time to complete this exercise thoughtfully, you can ensure that your charitable giving is in alignment with your current values.
2. Think About Consolidating Your Gift
In contrast to investing, diversification isn’t necessarily a winning strategy when it comes to philanthropy. Consolidating some of your giving can lead to greater impact to the organizations and causes you care most about. Focus on giving to a few key charities that most closely align with your core values. For example, if childhood literacy is important to you, you may choose to focus on giving to educational organizations or library literacy programs. 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) you’re likely to feel more satisfied – and achieve greater impact, too.
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3. Make it a Family Affair
Making an effort to involve your family in the charitable giving process can help you pass your values to future generations and create meaningful shared traditions. Start with a family meeting where you invite your kids or grandkids to actively participate in charitable giving decisions. This helps to instill the giving spirit early on, and meetings like this also allow an opportunity for each family member to share which causes are most important to them.
Your family will likely develop its own traditions over time, but some options to consider include pooling money together for greater impact, rotating the selection process for charities, and establishing a special fund that the kids choose how to allocate. When you’re working to build the habit of giving in your family, it’s not about dollar amounts or which organizations you support. It’s about the long-term, values-based traditions of giving that are sure to have long-term effects on your family members, too.
4. Do the Research
When you’ve taken the time to determine which causes best match you and your family’s charitable giving goals, be choosy about which organizations you select. You want to find the best charities to accomplish the goals you want to support, so start by looking at the mission of an organization to ensure it aligns with your giving intentions. Then, learn all you can about the finances and management of the organization – specifically, what percentage of your donations will actually go toward the underlying cause, rather than administrative overhead. You can use online resources like Charity Navigator, CharityWatch, Charities Review Council, and Guidestar to find the information you need to make the best decisions for your dollars.
5. Optimize Your Gift
Once you and your loved ones have gone through the process of determining where your philanthropy will be focused, there are a few steps you can follow in order to optimize your giving:
- Give directly. Many charities pay professional fundraisers from 40 to 80 percent of the proceeds received, so cut out the middleman when possible. Avoid donating to solicitors over the phone and give directly instead.
- Don’t using credit cards to donate. Charities oftentimes pay credit card fees of 3-5 percent, immediately reducing the level of impact you can achieve.
- Learn whether your employer has a matching program (many do!) that can help you level-up the value of your gift.
- Consider gifting appreciated assets as either a direct gift or through a donor-advised fund (DAF) which can help you achieve additional tax savings.
Note: If you’ve never used a DAF, know that they are an important tool to consider in your philanthropic efforts. They offer a flexible way to make a philanthropic gift with cash or appreciated securities while also taking a full tax deduction at the time the gift is made. Later, you can easily make ongoing gifts to your favorite organizations.
6. Think Outside the Numbers Box
Philanthropy doesn’t always have to mean a monetary gift. At some phases of your life, it can be more about where you spend your time than where you spend your money. Regardless of whether you’re giving at the financial level you’d like to or not, donating your time is a great way to feel more connected to an organization or a cause than simply writing a check.
Final Thoughts on Making the Most of Your Philanthropic Efforts
It can be very meaningful to use your discretionary dollars, your time, or even your talents to support organizations and causes that are meaningful to you. And, you don’t have to give a lot to make a difference. Start at a level you’re comfortable with and use the tips discussed here to maximize your impact and instill a habit of giving in your family, too.