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How To Make Charitable Giving A Tradition

COVID-19 has upended every area of our lives — but it hasn’t all been negative. Every business has been affected, but people are stepping up like never before. According to Fidelity Charitable, charitable giving has significantly increased since the start of the pandemic. We truly are all in this together.

Our propensity for charitable efforts varies greatly from person to person but at the end of the day, we can all agree that we want to leave this world better than it was before. Making charitable giving a cornerstone of your financial plan is a fundamental stepping stone to achieving that goal. 

How can you make charitable giving part of your financial plan during a pandemic and beyond? It’s not as complicated as you might think. Let’s dive into the details of how to make charitable giving a tradition.

Make a plan, set a goal

First things first, set a goal amount you’d like to give to charity now and in the future. What can you realistically donate this year? What about in 5 years? Is there a big enough gap between those two timelines where you’ll have to make some changes? These are questions you’ll have to know before a plan can be put in place.

While defining your goals, keep the following in mind:

  • Set a comfortable budget — a good rule of thumb to follow is to increase your donations in proportion to your income.
  • Speak with your financial advisor — you may be able to give more (or less) than you think.
  • Focus your efforts on a cause that your passionate about.

While you’re planning your giving throughout the year, keep in mind that nearly all donations happen in December. The holidays are a great time to give, but try to give smaller amounts throughout the year to make giving part of your regular financial and personal life.

Automate donations

Just like automating savings can boost your balance and keep you on track, automating donations can do the same. 

You can set up automatic monthly contributions to essentially any charity that has an electronic donation system. Examples could be your church or non-profit organizations. If you're interested in this route, contact the person in charge of donations at your desired charity. They will be able to tell you exactly how the system works from the frequency to the amount of your donation.

Automatic donations will help embed charitable giving into your financial plan. It will also help make charitable giving a habit! Charitable giving can easily become one of the many things that get forgotten or pushed to the bottom of the list. This type of strategy makes sure that giving is a top priority. 

Take advantage of financially-smart ways to give

There are many different ways to integrate giving into your financial plan. Some viable options may include:

  • Donor-advised funds: A donor-advised fund (DAF) allows for donations regardless of tax-bracket or income level. You can contribute cash, assets, property, etc and recommend a grant to the charity of your choice. Each contribution provides an automatic tax deduction. DAFs give you flexibility in where and how you would like to donate. They also allow you to involve the family. For example, you can have one person research and choose a charity to donate some of the family funds to one year.
  • Appreciated assets: Looking to offset capital gains? You can accomplish that by donating bonds, stocks, or real estate to charity. This maximizes your contribution as neither you nor the charity needs to pay tax on that money. 
  • Qualified charitable distributions: Qualified charitable distributions are direct payments from an IRA custodian to a qualified public charity. This vehicle is a great way for you to use appreciated assets from a traditional IRA to donate to the charity of your choice.

Each of these routes can help maximize your giving strategy — potentially allowing you to give more than you originally thought was possible.

Involve your family and loved ones

If charitable giving is important to you, get your loved ones involved. The possibilities are endless here. For example, your family could:

  • Take turns researching, presenting, and selecting a charity for DAF funds. 
  • Set aside a portion of holiday or birthday money to be donated on your children’s or grandchildren’s behalf.
  • Donate to your favorite charity instead of giving a traditional birthday or holiday gift.
  • Get out in the community and volunteer for a local cause (if it is safe and appropriate to do so in these times).

Bringing your family into this process and lifestyle enriches the experience and will help you establish a charitable legacy

Donate with your heart

As critical as it is to develop a strategy around your charitable efforts, the most important thing is that you donate to causes and organizations that move you, that inspire you, and that light the fire inside you.

Ask yourself these two questions: What are you passionate about? Where can you see the biggest impact from your donation? For example, if you’re passionate about rescuing animals, a great route would be donating to a local shelter where you can see first hand what your money is doing. 

For many organizations, monetary funds are only a part of the process and they rely heavily on volunteers. Perhaps with the pandemic, you can’t give all that you’d want to financially, but donating your time can make just as big of an impact.

Once you can find an organization, or multiple, that you’re passionate about, you'll be on the right path to a fulfilling charitable plan.

A choice towards a more fulfilled life

Making charitable giving a tradition is a powerful choice for the greater good. It’s a critical component of your financial life and personal life. It interwinds your passions and loved ones with your financial strategy because you shouldn’t give without seeing the numbers first. Make a plan, set a goal, work towards it, and let it flow fluidly as the years go by.

Are you looking to fit charitable giving seamlessly into your financial strategy? Take the next step and give our team a call.