Make Charitable Giving Part of Your Holiday Season — and Part of Your Financial Life

Giving back is something you can do all year round with the right plan. And that plan can be broken down to giving during your lean early years, your prime earning years and finally your retirement years.

By Craig Hawley

published 27 December 2019

in Features

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) .

Making the Most of Charitable Giving Before and After Retirement

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.

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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.

Give the Money, Keep the Tax Break with Donor-Advised Funds

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.

So, You Want to Start a Foundation? Great!

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Craig Hawley is a seasoned executive with more than 20 years in the financial services industry. As Head of Nationwide's Annuity Distribution, Mr. Hawley has helped build the company into a recognized innovator of financial products and services for RIAs, fee-based advisers and the clients they serve. Previously, Mr. Hawley served more than a decade as General Counsel and Secretary at Jefferson National. Mr. Hawley holds a J.D. and B.S. in Business Management from The University of Louisville.