Charitable Giving With a Purpose

Embracing the Season of Giving

The holiday season is a great time to reflect on our many blessings and consider how we might share our abundance with others in need.

Donating to causes that align with your principles is a great way to live out your financial values and make a meaningful difference in someone’s life. Studies have shown that giving your resources away can make you happier and more fulfilled. 

There are so many wonderful charities and causes that need support, but it can be overwhelming to identify where your resources will have the greatest impact. We’ve put together a guide that can help you determine the best course of action for your charitable giving. 

Stewarding Your Resources Wisely

There are four key metrics to consider when looking for a charitable organization that is compatible with your values.

1. Your Main Goal – Consider what kind of impact you want to make with your resources. Are you passionate about education? Do you feel strongly about world hunger crises? Are you interested in sponsoring conservation efforts? There are a million ways to make a positive impact. Choose a cause or two and look for organizations that operate in that sphere.
   
   
2. Your Available Resources – Before you pledge a gift, it’s important to identify how much and how often you are willing and able to give. Do you want to make a one-time gift or start a recurring donation? Are you looking to pool your resources with others or fund a specific project on your own? 

Take a look at your finances from the past year and look ahead to the future. Your debt, your responsibility to dependents, and your amount of disposable income are all factors that can affect your giving capacity. Some years, you might be able to be more generous than others.

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3. An Organization’s Reach – Are you looking to impact your local community or are you focused on a national or global level? Some organizations are making an impact on the other side of the world, while others are serving right in your backyard. Consider where you’d like to make a change. Your answer will help you determine the size of the organization that will best suit your charitable giving needs.
   
   
4. The Tax Benefits – There can be personal benefits to giving, including tax deductions. Tax deductions can help free up more resources and expand your capacity for generosity. If this is important to you, donate to organizations that are recognized as official nonprofits and are classified as 501(c)(3) organizations. These groups have special tax privileges because of their charitable status. If an organization does not have this distinction, your gift may not qualify as an itemized deduction on your taxes.

Once you have a clear idea of your charitable goals and your available resources, start researching your options. The internet is a great way to find charities that you may not have otherwise known about. You can also ask friends and family for recommendations of charities worth exploring. Either way, you should do your due diligence on the organizations to confirm they meet your criteria for support and to ensure that they are legitimate. Unfortunately, charitable scams do exist and can be quite convincing.

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Tax-Efficient Giving Strategies

Donor-advised funds (DAFs) and gifting appreciated stock can be great ways to give. 

A DAF maximizes your tax benefits and gives you control over the timing and distribution of your donations. This is a helpful strategy for planned giving that spans multiple years. Through the use of a DAF, you can invest the contributed funds and allow the gift to grow over time. This method is helpful for those with significant appreciated assets.

Donating appreciated stock is more tax-efficient than selling the stock and donating the cash proceeds. Putting appreciated stock in a DAF allows it to then be sold tax-free and remain in cash, or be reinvested in an allocation that aligns with your gifting timeline and goals.

Learn more about tax-efficient giving strategies in this blog. 

Avoid Misappropriated Donations

Research is a very important part of charitable giving. Using websites like Charity Navigator, Charity Watch, and Guidestar allows you to check an organization's financial information and see where they are funneling their financial resources. Using a nonprofit's website can alert you about specific funding needs they are focused on. 

If you are making a general donation, it is called an unrestricted gift. Unrestricted gifts can be used for anything, so nonprofits are able to be flexible and direct those funds toward the greatest need. This might include electricity bills, salaries, or company events. 

If you want your donation to go toward a specific cause, you will likely need to make that clear upon donating. This is called a restricted gift. Restricted gifts are directed to a certain program and the organization must use those funds for the specific purpose you intended them for.  

Don’t Overcomplicate Giving This Holiday Season

Giving doesn’t have to be complicated. Sometimes the most impactful giving can be found in the little things. It’s volunteering for a toy drive to serve underprivileged kids, offering to pay for the groceries of the family ahead of you in the checkout line, or just making a spur-of-the-moment financial donation at the end of the year. 

Regardless of how big or how small, we hope this holiday season is full of opportunities to give generously of our time, talent, and treasure. 

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