Examples of generosity range widely in size and style, from grantmaking that bestows millions of dollars upon a single charity to simple acts of kindness such as mentoring a teen or visiting nursing home residents to offer companionship.
While some of the most inspired and fulfilling gifts are made spontaneously, thinking about charitable giving as a core component of your financial plan, with specific targets and goals, can help your donation achieve more. When you don’t have big amounts to give, it’s especially important to manage your gifts carefully.
Here are some insights and ideas for giving with any budget:
1. Charitable giving vs. philanthropy
While charitable giving and philanthropy are often used interchangeably, these terms can distinguish between styles of giving. For many of us “philanthropy” likely conjures images of wealthy benefactors granting impressively large sums of money to charity. Rather, philanthropy is more of a strategic, long-term form of giving, usually around a specific mission and goals, whereas charitable giving is usually short-term, reactive and focused on meeting immediate needs as they arise. Both are beneficial — and both may be accomplished with any budget.
Regardless of which giving style works best for you, check out these tips for ways to make it more impactful, including how to coordinate it with your tax strategy, estate plan and investment management, and how to formalize it with a charitable vehicle such as a private foundation or donor-advised fund.
2. Give time, talent and treasure
Whether you give for the short or long term, remember the three Ts: time; talent and treasure. All of us are capable of uniquely sharing with others and may do so in a variety of ways: volunteering our time to others (for example, helping at a homeless shelter or library); using talents to help others (e.g., a doctor volunteering at a local medical clinic), and sharing treasures (e.g., money, assets, loans) with others. Visit here to explore this idea further.
3. Clarify your values, passions and priorities
While giving is ultimately intended to benefit the recipient, it can offer personal gratification and fulfillment for the giver as well –especially when givers take time to determine their values, passions and priorities. The more you can channel your giving toward issues that are important to you, and toward utilizing your special skills and talents, the more gratified you’ll be with the impact your generosity achieves. You’ll likely also avoid feeling overwhelmed from trying to “save the world” if you prioritize your giving. While the global need for charitable support is endless, keep your giving focused for optimal results.
4. Get entrepreneurial
If you have entrepreneurial spirit and strong business experience, apply your drive and expertise to your philanthropy. Entrepreneurial philanthropy is an innovative approach to solving social problems that’s especially effective for business leaders and change agents who want to make lasting impact in the world and build a legacy for themselves, their families and their communities. It’s also an ideal way for younger professionals to hone their business and leadership skills. Visit here for more information.
5. Involve your family
Philanthropy is an excellent means of uniting a family around a common cause. Whether you’re planning your year-end charitable donations or running a private foundation, involve your family members in your efforts, including teens and young children. Giving together lends itself to sharing values across generations and expressing each other’s interests, passions and creativity. Visit here to explore ways of engaging children and young adults in giving. And if you have a family foundation or are thinking of starting one, consider these five benefits.
6. Give wisely: Evaluate charities carefully
Take your time when donating to charities, especially during the year-end holiday rush, to be sure your generosity will make optimal impact. Visit here for insight into how you can assess a charitable organization across several dimensions, including how it’s run, how it utilizes donations it receives, how it reports on results, and how to ascertain if its mission is a good fit with your philanthropic priorities.
7. Establish a schedule, consider a charitable vehicle
You don’t need millions of dollars to set yourself on a formal schedule for giving. Doing so can help you consistently meet your giving goals while managing other financial obligations. For those who give their time and talents, many commit to a regular schedule of when they volunteer, such as weekly or monthly visits to help stock a food pantry or to tutor a child in need. For those making monetary donations, November and December are generally considered the giving season during which many people make annual year-end contributions to their favorite charities.
Others, however, prefer to donate more frequently, monthly or biannually, for instance, either directly to select charities or through a charitable vehicle such as a donor-advised fund or a private foundation. Visit here to explore the differences between these two vehicles and how they may be used in tandem for maximum giving benefit.
If you need guidance with your giving plans, a financial adviser or accountant can help with determining the most effective vehicle for your budget and with navigating the tax implications of your donations (e.g., eligible deductions). Specialized philanthropic advisers are also available for in-depth counsel around issues such as managing a private foundation, developing a strategic philanthropic plan and establishing a charitable legacy.
Gillian Howell is head of client advisory solutions at Foundation Source.