Americans are truly generous, supporting causes and organizations and giving in the form of money, time and taking leadership roles.
Charity Navigator reports that about 2% of the U.S. gross domestic product—approximately $400 billion—was donated by philanthropically-minded Americans to non-profits last year. Some give checks, others volunteer in programs or as leaders, while others are more sophisticated and give through trusts or endowments.
According to Morningstar’s recent article, “7 Tips for Better Charitable Giving,” creating a long-term charitable or philanthropic plan means careful consideration with your family, as well as professionals. You want to develop the right giving strategies that address estate, tax, and investing issues. Here are a few ideas to make certain that your money is donated wisely.
- Make a Plan. Some donors feel they should leave large, one-time gifts to colleges, hospitals, or other charitable institutions. Others divide their donations among multiple causes over a period of time. Start with a “goals analysis” of your charitable strategy and implement a basic financial plan. Write down your charitable priorities and look at which have the most immediate need and where a donation can do the most good.
- Research Your Causes. Look at how much the charity spends donor funds on marketing and administrative expenses. It is important to see the percentage of donations that actually goes to the programs. Some charities have very high administrative costs, while others run lean operations.
- Determine the Timing. Some people choose to leave some of their estate to specific causes after they die and others donate while they’re still alive. How might this impact your retirement income? You should also consider whether you want to make ongoing contributions or a lump sum.
- Work with Professionals. An experienced estate planning attorney can help you with your charitable-giving strategy. An attorney will analyze how your donations impact your estate and heirs, potential tax benefits during your lifetime and the types of donations you can make. Your charitable giving should be a component of your overall estate planning strategy.
Whichever way you decide to go with your charitable giving plan, the process does take time to develop and execute. Be open to the idea that the plan may change over time, so make sure to build in some flexibility. The process should be both educational and rewarding, as you see how your generosity can make an impact and create a legacy.
Reference: Morningstar (July 29, 2017) “7 Tips for Better Charitable Giving”