How to Increase the Impact of Your Giving

Most people want to help make the world a better place, in some way, and are willing to share what they have with others to accomplish that. Here are some thoughts about how to maximize your contribution:

Give within the context of a plan.  All too often in life we tend to take the path of least resistance or are driven by “the tyranny of the urgent”. Charitable giving often suffers the same fate: we don’t carefully consider in advance how much we want to give, or to whom, and our giving becomes more a reflection of the requests that happen to come our way than of what we truly value.

I would suggest that to truly optimize your giving, you actually need two plans: a holistic lifetime financial plan, and an annual giving plan. The overall plan allows you to make informed giving decisions in the context of the rest of your goals. There is a lot of wealth tied up in the hands of people who have no idea how much they need for themselves, and as a result don’t realize how much they can afford to share with others. The annual giving plan provides discipline and ensures that your giving lines up with your own agenda, not someone else’s.

The point is, charitable giving is really an investment and deserves the same thoughtfulness that you’d give when deciding how to handle your portfolio. Be more intentional about your giving and you will have a greater impact.

Maximize the tax benefits.  You have limited resources and there is an endless need out there. By giving in the most tax-efficient way possible, you maximize the amount of money that you are able to share with others. It is costly – and needlessly so - for example, to make charitable gifts with cash and then fund those gifts by selling appreciated assets such as marketable securities, real estate or a privately-held business and paying capital gains taxes. But people do this all the time. By giving appreciated assets instead, you get the same tax deduction now, but also avoid capital gains tax. 

If you find yourself in a higher tax bracket from one year to the next, you should consider matching your charitable deductions with your higher-income year(s) to maximize the tax benefits. Uncle Sam is your partner in charitable giving, as he effectively subsidizes your giving by up to 40%. A donor-advised fund is a great way to accomplish this. Take advantage of every opportunity to reduce taxes and thus increase the money available for you to share with others.

Invest yourself.  No organization could survive without consistent financial support. However, money is not the only resource of which your favorite causes are in short supply. You can increase your impact by sharing some of your time and talents as well. What issue or organization matters most to you? If you are not sure what you have to offer, go and ask, and I am sure they will find a place for you.

We all face increased “busy-ness” in our lives, so it is easier to give a check than give ourselves. As a result we can find ourselves not really connected with the organizations we support. Beyond the benefit to the organization, you will gain something as well - the satisfaction that comes from a more direct impact on the lives of others or helping an organization operate more effectively.