With Americans donating more than $449 billion in 2019 up 5.1% from the year before, philanthropy is alive and well. In general, roughly a third of donations are made in December and a tenth in the last three days of the year.
While there’s never a bad time to give, writing a check on December 31 may not be the best approach, says Sally Alspaugh, a chartered advisor in philanthropy. Creating a strategic charitable giving plan could enable you to contribute even more. “A giving plan lets you go to the next level,” she says.
DO THE MATH
Figure out what you can afford to give. Just as you would when creating a financial plan, look at your expenses and savings and come up with a number. If you want to donate more, you may need to cut back elsewhere. “A charitable budget is like any other budget,” says Bethany Griffith, a Columbia, South Carolina-based chartered financial planner. “A yes to something is a no to something else.”
DECIDE WHERE TO GIVE
With a charitable giving plan, you can think carefully about how much you want to donate and to where. What matters most to you? Funding a hospital? Helping a school raise money? Research all your prospects to see which causes are closest to your heart and where your donations are needed most.
FACTOR IN LONG-TERM GIVING
Thinking long-term is a must when giving large gifts. Let’s say you want to donate $100,000. Spreading that payment over three to five years, if not longer, gives you more control, says Griffith. Would you prefer making two $50,000 gifts, or five annual gifts of $20,000? You also control how you pay. Charitable giving vehicles, such as donor-advised funds, grow your principal over time, allowing you to make an even greater impact.
CONSIDER TAX SAVINGS
Because charitable donations to eligible organizations can carry tax benefits for you, it’s smart to review recent tax laws and see how they might apply.
REVISIT YOUR PLAN
Once you have a charitable giving plan, review it annually. If your income grows, you may want to increase your donations. Or you may learn about a new charity you want to support. Making little adjustments along the way will ensure that the causes you care about most benefit from your generosity.
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