The True Value of Giving
To add value to anyone’s life, we first must start with ourselves. By taking care of our own needs, facing our own challenges, and building our independence, we begin the path to better ourselves. Eventually we’re able to make moves to better our loved ones, our community, and their futures out of our own prosperity. We share the benefits we’ve earned with them because we care for them but also because we now have the resources in order to do so.
Sharing the Wealth
There have been numerous studies on the positive effects that charitable giving can have on your emotional and mental health. We’ve also discussed on several occasions the different ways charitable contributions can be an important part of your financial planning strategy:
While the benefits are much deeper than just what gets reflected on your tax return, your financial planner should be utilized as a resource to help you decide how and when to give back, for maximum impact on your community and your own finances. Charitable giving allows you to pass along opportunities to those needing guidance, support, and a chance to regain their independence, health, and happiness. Often times, your donation is you buying back into the community and organizations that have positively impacted your life. You’re paying it forward. To maximize those benefits, treat your charitable actions the same way as your investments—with a clear plan. Your financial advisor can help you strategically integrate charitable contributions into your financial plan.
Know When To Give
To make sure you and your wealth are protected, slow down and make a plan prior to cutting a check. While no one will turn you down when you offer your support, charitable contributions shouldn’t be the result of quick judgement. While many assume that all charitable donations offer tax benefits, there are several factors that impact whether that is the case:
Your income: There are limitations on how much of your charitable donation can be deducted from your taxes. Your income plays a big role in that, especially if you’re planning on donating 20% or more of your adjusted gross income (AGI). This is one of the first variables that your financial planner will want to review before making recommendations. Depending on their projections for your income and taxes, it may be better to look at appreciated assets as a source for your donations or pare back your monetary contribution. After all, there are other ways you can make a charitable impact outside of donating funds.
Who you’re donating to: Ensure that who or what you’re donating to is a qualified organization that is recognized by the IRS. Contributions to specific individuals or political organizations do not qualify. Investigate the charity by checking with the IRS beforehand.
Now versus later: We all want the immediate gratification and appreciation that comes with knowing you’ve given to a worthy cause. However, the last thing you want to do is put yourself in harms way by giving outside your means. Many individuals and families are better off including charities as part of their legacy plan rather than their current finances. By including charitable donations as a part of a will, the funds may be delayed but the individual’s health, safety, and financial footing are protected. Your advisor can help you answer the now versus later debate.
Our world is not perfect, but we can make it better. There are numerous areas in need of improvement, care, and generous attention. The world can always use generous people like you, and to be in a position to contribute to the people and places that need it most can be invaluable. We are here to help you decide where to direct your donations. With our long-term tax planning expertise, we can help to plan your charitable gifts so that they have the greatest impact on you and your community.