The holiday season is wrapping up, and so is the charitable giving season. In 2018, roughly one-third (31%) of annual giving occurred in December, and 12% of all giving happened in the last three days of the year, according to the National Association of Nonprofit Organizations & Executives’ (NANOE) .
This holiday season, I’m encouraging you to expand your approach to charitable giving. In addition to volunteering your time or writing a check to a cause you’re passionate about, or donating your clothes and household items to those in need, you can work with your adviser to make charitable giving part of your holistic financial plan in 2020 and the years ahead.
No matter where you are in your financial life, there are ways for you to make a difference.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
1. The Early Years: Give Back Any Way You Can
When you’re a student, or just starting in your career, you might not have large sums to donate, but that doesn’t mean you can’t give back. There are so many ways that you can make your community a better place. Decide what charitable causes have a special meaning to you and take action.
Volunteer your time at your local food bank. Make a commitment to help tutor or mentor underserved youth. Make regular visits to a local senior center or veterans hospital. Help build a house with Habitat for Humanity. Your talents, resources and time can make a big difference in the lives of the less fortunate.
2. Prime Earning Years: Choose Wisely
Now that you have more resources, ask yourself: What organization or cause are you and your family truly passionate about? Several other questions are also worth considering: Is this charity a good investment? Is it possible to give with your heart and your head? To choose the right charitable organization, look for fiscal health, accountability, transparency and results. There are a number of resources that can help:
- GuideStar contains IRS records from millions of nonprofits, providing basic information on a charity’s income, spending, mission and executive salaries.
- BBB Wise Giving Alliance, affiliated with the Council of Better Business Bureaus, reviews thousands of national charities based on 20 accountability standards, including governance, oversight and effectiveness.
- Charity Navigator rates non-profits based on financial health, accountability and transparency.
- GiveWell uses a data-driven approach to recommend charities based on hard evidence and scientific proof of effectiveness.
- CharityWatch rates hundreds of charities, taking a watchdog approach to expose questionable fundraising and finances.
Decide how charitable giving fits into your annual budget and overall financial plan. Talk to your financial adviser if you have one, to determine the amount you will give and the timing for your donations. You may want to you set up monthly donations, or you may want to give a lump sum once a year. It may make sense to “bunch” charitable donations every other year now that tax laws related to itemized deductions have changed. Starting early and having a plan for the year will make a bigger impact in the long run.
3. Retirement Years: Creating Your Legacy
As you wind down your career and plan for the future of your estate, think about ways to continue supporting your favorite organizations and causes. Your adviser may be able to help you evaluate the benefits of establishing a trust as part of your legacy planning approach, to provide tax advantages, while benefitting both your chosen heirs and preferred charitable organizations. Trusts are commonly used for legacy planning, especially among high net worth and ultra high net worth investors.
There are two different types of trusts typically used to for donating to charities: a charitable remainder trust and a charitable lead trust. A charitable remainder trust pays a stream of income to your beneficiaries before the remainder is paid to the charities of your choice, and a charitable lead trust donates to charities throughout a chosen timeframe before giving the remainder of the funds to your heirs.
Beyond making charitable contributions or providing for family members, trusts offer many advantages, including helping reduce estate and gift taxes, avoiding probate and protecting assets from creditors and lawsuits.
’Tis the Season for Giving
Giving back has always been important to me. When I was in college and playing basketball, I would donate my time to speak with young people at various schools and civic organizations. When I was early in my career, I donated my talent as a lawyer by serving as Chairman of the Board at my church. Now, my wife and I give both time and money to Dare to Care, a hunger relief organization, and we also donate to our church, the University of Louisville (our Alma Mater), Maryhurst (a center for abused children) and other organizations.
As I have learned, you can make charitable giving an ongoing priority in a multitude of ways, as you graduate through the different stages of your financial life. While any time is right for you to make a positive impact on others, take advantage of the holiday season to start giving back, as well as to make a plan to make a difference for yourself and those around you, now and in the years ahead.
-
These Stocks Dipped in 2025. Do They Have Value?If you are looking to add new long-term positions to your portfolio, as you should, this is the time to examine stocks that the market shuns.
-
Striking Gold (or Gas): A Financial Pro Unpacks the Nuances of Energy InvestingInvesting in the energy industry, particularly oil and gas, involves understanding the facts about how projects generate returns through cash flow and long-term asset building, while also being aware of the risks.
-
Striking Gold (or Gas): A Financial Pro Unpacks the Nuances of Energy Investing
Investing in the energy industry, particularly oil and gas, involves understanding the facts about how projects generate returns through cash flow and long-term asset building, while also being aware of the risks.
-
Escaping the New Golden Handcuffs: A Financial Expert Has a Plan for Today's ExecutivesFeeling stuck in your job? It could be your complicated compensation package, but it also could be where you live, your family or even how you view yourself.
-
I'm a Financial Planner: Here's How to Invest Like the Wealthy, Even if You Don't Have MillionsPrivate market investments, once exclusive to the ultra-wealthy and institutions, have become more accessible to individual investors, thanks to regulatory changes and new investment structures.
-
Four Ways a Massive Emergency Fund Can Hurt You More Than It HelpsSaving too much could mean you're missing opportunities to put your money to work. Redirect some of that money toward paying off debt, building retirement funds, fulfilling a dream or investing in higher-growth options.
-
I'm a Financial Planner: How to Dodge a Retirement Danger You May Not Have Heard AboutTiming is everything, and sequence of returns risk can mean the difference between a retirement nest egg that's overflowing … or empty.
-
Caring for Aging Parents: An Expert Guide to Easing the Financial and Emotional StrainEarly conversations, financial planning and understanding the progression of care needs can help to mitigate stress and protect family relationships.
-
I'm a Financial Adviser: The OBBB Is a Reminder for Older People to Have a Long-Term PlanThe new tax bill presents a good opportunity for retirees to revisit tax plans, look into doing some Roth conversions and consider plans for long-term care.
-
I'm an Insurance Expert: This Is Exactly Why Your Insurance Rates Are Soaring (and What You Can Do)A dramatic rise in the frequency and cost of severe weather and wildfires means you need to prepare, prepare, prepare — no matter where you live — for higher premiums.
