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Make the Most of Your Charitable Giving

by Seerat Fayaz   ·  December 16, 2021   ·  

Make the Most of Your Charitable Giving

by Seerat Fayaz   ·  December 16, 2021   ·  

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During the holidays, there is usually a special emphasis on giving, and this year’s epidemic has heightened the need to assist organizations on all levels—local, national, and worldwide. 

Be careful and smart in your giving, since it’s not only how much you give, but how you give that matters. Here are five steps to help you design a strategy for getting the most out of every dollar.

Identify your cause

There are hundreds of meritorious causes, including homelessness, the environment, refugees, medical research, the arts and humanities, and social justice. 

To begin, narrow your focus by considering why you want to offer. Make it unique. What motivates you? What are your hobbies and interests? What does it mean to support a cause that reflects your values? Consult your family and include them in the decision-making process. If you have children, including them in your charitable giving plan might spark fresh ideas and serve as an inspiration for both them and you. 

Second, narrow down your choices to five issues that you are most passionate about. It may be beneficial to create a statement explaining why and how you wish to support each cause. This form of values-based giving may make your gift more personal and meaningful, as well as inspire you to keep looking for new ways to donate.

Create a giving structure for yourself. 

Choose the sorts of assets you’ll donate. It might be in the form of cash, assets (such as gently worn clothing or furniture), real estate, or valued stocks. Donating valued assets, such as publicly-traded equities, that have been kept for more than a year can be particularly beneficial, not just in terms of saving taxes but also in terms of giving more to charity. The tax deduction is determined by the sort of asset you donate and the type of charity to which you donate. 

It’s a good idea to consult a financial counselor or tax consultant before making your contribution. You can make a one-time gift or set up a donor-advised fund (DAF), a private foundation, or a trust as a charitable giving vehicle.

Create a plan

Setting a three-year charity giving budget, rather than focusing just on the current year, might be beneficial. This kind of big-picture thinking may help you make sure that your charity giving goals are compatible with your entire financial condition and don’t risk other key goals, such as retirement. 

After that, conduct some studies. With over 1.5 million NGOs to choose from, identifying specific groups might be difficult. Seek advice from friends and specialists who are familiar with the issues you wish to support. To uncover local nonprofit possibilities, contact your local community foundation. 

Create a shortlist and undertake a deeper analysis to ensure there are no red flags before you make a gift once you’ve picked the precise groups you wish to support.

Implement your plan

Consider the purpose of your gift, how often you want to offer it, and any special stipulations you want to include. Do you want your donation to go toward a specific cause or do you trust the organization to spend it wisely? Will your contribution be made monthly or annually if it is ongoing? While taxes may influence when you contribute, some families choose to give at certain periods of the year to make the present more special. 

Because you may pre-fund a DAF, it’s a wonderful option for continuing donations. The DAF is a charity in and of itself, where you may contribute now (and get a tax credit) and make suggestions for future gifts to many organizations, typically for as little as $50. In the meanwhile, DAFs allow you to invest and perhaps increase your savings.

Keep track of your donations (a DAF will do this for you), and examine and adjust your charitable strategy on a regular basis. As your life changes, you may adapt your donating strategies and plan accordingly. 

Look into it more. 

Keep your eyes, ears, and mind open to alternative forms of giving, whether you’re new to charity or a seasoned pro. This includes asking your company whether they match charity donations, volunteering, or planning a fundraiser or event to promote a cause. You may join a nonprofit’s board of directors or volunteer your professional talents. Be adaptable. As you and your hobbies and interests evolve, so will the way, where, and how much you donate.

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