If you sometimes worry that your approach to charitable planning isn’t quite as strategic as it should be, you’re not alone. Indeed, a 2024 study by Wells Fargo* found that more than half of all Americans surveyed (57%) want to be more strategic in their charitable giving. But here’s the good news: it’s not too late to create or improve your own charitable giving plan.
By refining your charitable planning, you can help boost your impact on the causes you care about—and you may even be able to realize greater financial and tax advantages for your family along the way. Here are 6 actionable steps you can take to help improve your giving strategy now.
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1. Challenge Your Giving Mindset
If you have historically approached philanthropy as something you do with your “leftover” funds after all your finances are in order, now is a good time to assess that stance and decide if giving is your priority even if it means stepping outside your comfort zone. Taking a “give first” mindset can be mentally, spiritually, and emotionally rewarding—and it can also compel you to plan better.
The First Step:
- Make Giving Part of Your Annual Budget – Treat your philanthropy the same way you treat other budgetary line items, like your mortgage payments and your car payments. Proactively identify how much you can give this year. From there it becomes easier to figure out how and where to give it.
Pro Tip: Start small if a “give first” mindset feels daunting. Commit to a percentage of your income or a fixed amount, and gradually increase it as you grow more comfortable. The key is consistency—making giving a non-negotiable part of your financial routine. |
2. Sharpen Your Philanthropic Goals
When it comes to charitable giving, what’s your why? Reflect on what matters most to you. Are you passionate about education, healthcare, environmental conservation, or supporting your local community? Clearly defining your goals can help ensure your contributions align with your core values.
How to Get Started:
- Create a Giving Mission Statement – Write down your priorities, the impact you want to have, and the types of organizations you want to support. This statement can serve as a guiding document for your future charitable activities.
- Get as Specific As Possible – For instance, rather than a broad goal of “supporting education,” you might focus on funding scholarships for underprivileged students in STEM fields. The clearer your goals, the more impactful your donations will be.
- Establish SMART goals – Don’t settle for vague giving goals. Develop goals that are Specific, Measurable, Achievable, Reasonable, and Time-Bound (SMART!).
Pro Tip: Regularly revisit your philanthropic mission. Life changes, such as a significant income shift or new personal interests, may inspire you to tweak your goals over time. |
3. Diversify Your Charitable Tools
Improving your charitable planning often involves exploring tools and vehicles beyond direct cash donations. There are many ways to structure your donations to help ensure they deliver maximum impact for the recipients while providing potential tax benefits for you. Work with a financial planner or tax advisor to understand which strategies best suit you.
Options to Explore:
- Appreciated Assets – Instead of cash, consider donating stocks, mutual funds, or other appreciated assets you’ve owned for more than a year. This can help you avoid capital gains taxes while still deducting the full market value of the donation on your taxes. Learn more about donating stock to charity.
- Bundled Contributions – By grouping multiple years’ worth of planned donations into a single tax year, you can exceed the standard deduction and potentially reap greater tax benefits. This approach can be especially valuable under current tax laws that favor higher thresholds for itemized deductions. Read more about how donations affect taxes.
- Donor-Advised Funds (DAF) – A DAF can act as a charitable savings account. You can invest funds, claim tax deductions, and recommend grants to qualifying nonprofits of your choice. A DAF is often a popular solution for those who want to bundle their contributions. See how a donor-advised fund works.
- Charitable Trusts – Trusts, such as charitable remainder trusts or charitable lead trusts, are advanced giving vehicles that provide both tax advantages and structured support for your chosen causes over time.
- Qualified Charitable Distributions (QCDs) – If you’re over 70½, you can use a QCD to make contributions directly from your individual retirement account (IRA) to a qualified charity. This allows you to satisfy required minimum distributions (RMDs) while reducing your taxable income.
- Endowments and Legacy Gifts – For those interested in leaving a lasting legacy, creating an endowment fund or including charitable organizations in your estate plan helps ensure ongoing support for your chosen causes.
- Donated Items – Donating physical assets, such as cars, boats—even homes—can also help your tax savings.
Pro Tip: As you evaluate different tax-saving vehicles, don’t lose sight of the real reasons why you give. Be sure to reserve a portion of your charitable planning budget for giving opportunities that are unplanned and/or don’t come with a tax deduction, like helping a family in need after a housefire or pitching in on a neighbor’s GoFundMe. |
4. Conduct Due Diligence on Charities
Giving with intention means ensuring your donations are going to reputable organizations that can maximize impact. Take time to research nonprofits before contributing.
How to Vet Organizations:
- Review Financial Transparency – Tools like Charity Navigator or GuideStar can offer insights into an organization’s financial health, program effectiveness, and accountability.
- Understand Their Impact – Look for charities that share detailed reports on how they allocate funds. Most high-performing organizations provide measurable outcomes and stories that demonstrate their success.
- Align with Your Values – Beyond financial efficiency, ensure the organization’s mission and methods resonate with your personal vision for making a difference.
Pro Tip: Keep a record of all interactions with charities, including donation receipts, annual reports, or direct communications, to maintain a clear understanding of how your funds are being used. |
5. Incorporate Family into Your Strategy
Charitable planning can be a wonderful way to involve your family and instill a legacy of giving. Engaging your loved ones in the process helps ensure your philanthropic vision is continued across generations.
Ideas for Family Participation:
- Host Family Discussions – Share your charitable priorities and invite family members to contribute their own ideas. Decide as a group which causes or organizations to support.
- Create a Family Foundation – If your household has substantial resources, consider establishing a private foundation. This provides a structured way to manage charitable efforts and increase family involvement.
- Encourage Volunteerism – Beyond monetary donations, you and your family can volunteer time and skills to your chosen causes. This is especially meaningful for younger generations.
Pro Tip: Use charitable planning as a teaching opportunity, encouraging children or younger family members to learn about budgeting, generosity, and social responsibility. |
6. Revisit and Adjust Your Plan Regularly
Charitable planning is not a “set-it-and-forget-it” exercise. Regularly reviewing and fine-tuning your strategy can help ensure that it adapts to changes in your financial situation, tax laws, and philanthropic priorities.
Key Steps:
- Annual Reviews – Schedule time each year to evaluate your giving strategy. Are you meeting your goals? Are there areas to improve or refine?
- Stay Updated on Tax Changes – Tax laws affecting charitable giving can shift. Work with a trusted advisor to stay informed and make adjustments as needed.
- Monitor Emerging Opportunities – Nonprofit trends evolve, and new opportunities to make a difference are constantly arising. Revisiting your plan helps you stay actively engaged.
Pro Tip: Use benchmarks like a percentage of annual income or specific milestones (e.g., inheritance, windfall gains) to guide your review process. |
Know When to Ask for Help
Charitable planning is never truly finished. Whether you’re early in your career or well into retirement, review your giving strategy regularly to ensure that it remains both meaningful and manageable for you. Having a philanthropy-minded financial advisor like Advent Partners can help. Schedule a time to learn how we can help you strategically and generously support the people and causes you love the most—without sacrificing your financial confidence.
*Source: Wells Fargo 2024 Giving in America Report
DISCLAIMER
This blog does not provide legal, tax, or accounting advice. Before making decisions with legal, tax, or accounting ramifications, you should consult appropriate professionals for advice that is specific to your situation. A Financial Advisor is not a licensed attorney and legal advice is not part of any engagement for financial planning or estate planning services.
A donor advised fund (DAF) is a separately identified fund or account that is maintained and operated by a section 501(c)(3) organization, which is called a sponsoring organization. Each account is composed of contributions made by individual donors.
A qualified charitable distribution (QCD) is a distribution from your individual retirement account (IRA) to a qualified charity. You must be age 70½ or older to make a QCD. A qualified charitable distribution is not taxed, nor is it included in your taxable income.
