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How to Give: Creating a Personal Philanthropy Plan That's Right for You
How to Give: Create a Personal Philanthropy Plan That's Right for Yo
If you want to get more involved in personal philanthropy but aren't sure how, we've got the perfect guide to help you get started. Learn how to give and stay true to the causes that matter most to you. Click here for more info.
Keyword(s): how to give
While some religions ask for 10% of income, most charitable giving hovers around the 1% mark. While this can be a significant amount of money if we're talking about the highest earners on the planet, lower income people donate more frequently. If you don't know how to give, you won't be able to create a personal philanthropy plan that has the impact that you want it to.
Follow these 5 rules for figuring out how to give meaningfully and impactfully.
1. Narrow Down What You Care About
The biggest struggle for most people who want to give is deciding who they should give their money to. There are lots of viable non-profits and foundations that do great things for causes who need a megaphone. Whether you care more about the environment, aid to countries with emerging economies, or children in your backyard, there is so much good to be done.
If you're a high earner, donating money is great for your tax writeoffs at the end of the year. Also, success doesn't happen in a vacuum. Giving back is your responsibility when you're rewarded by the work others have done before and others continue to do around you.
You should start by determining what your three most important causes are. What are the three things that keep you up at night the most? There may be some overlap or there may not be.
If you care about the ethical treatment of animals and a certain rainforest preservation equally, determine which needs your money the most. While it's a harsh reality, not all foundations and non-profits are created equally.
2. Think About Real Value
When narrowing down the choices for where to give your money, you may have to do some investigation. Just because one non-profit has a slicker website than another doesn't mean that they're more legitimate or a better service provider. It could, in fact, mean that they're spending their money in the wrong place.
If for every dollar you give, only 30 cents makes it to the actual cause you're hoping to support, that company has too much overhead. If the CEO of a non-profit is pulling in millions every year, they might have a problematic mission statement. Do your research to ensure that whoever you donate to is spending their money wisely.
Any non-profit or foundation worth its salt will have a breakdown of how every dollar gets used. While there will inevitably be some amount of money reserved for administrative tasks, it shouldn't eat up most of what you're giving them. If it does, there could be a company who will spend your money more wisely.
3. Do You Want To Be Anonymous?
Depending on the size of your donation, you might have to make a choice whether or not you want your name to be shared with supporters of the foundation and non-profit. It's common for a foundation and non-profit to thank its donors at annual fundraisers, in its correspondence, or even to donate a section of a building to them. If you're looking to be anonymous, for personal or political reasons, be sure to let the foundation or non-profit know in advance.
Being anonymous is a great way to let the spotlight stay on the fund you're donating to. If you're not a household name, attention to you could detract from the goals of the foundation or non-profit. If there might be some baggage attached to your name or any perceived conflict of interest, anonymity could be an asset.
However, there's nothing wrong with being proud of the gift that you provided a foundation. Being anonymous isn't somehow more noble than being thanked. It could inspire other people in your industry or professional circle to start paying attention to the issue you're donating toward.
4. Diversify Your Giving
While it can feel good to donate, you might start to feel like a certain non-profit is too dependent on your gift. You might also feel that you have more than two or three issues that you want to solve and can't give to just one. This is when you might choose to diversify your gifts.
Giving is your personal choice. Make sure it always feels like it.
5. Devote Your Estate or Give Money Now?
Rather than giving money now, you can always defer your gifts to a later date. You don't have to give money to the non-profit while you're alive. Instead, you could donate a portion of your estate to go to the cause you care about the most.
This is one of the ideal ways to give because it means that you can cover a portion of your estate's taxes and won't have to worry about budgeting for giving now.
If you'd prefer to see the issues you care about the most dealt with in a timely manner and on a more urgent basis, give the money now. You can see the money being used during your lifetime. You may want to consider a donor-advised fund as well. Contact BRW Tax & Accounting to discuss.
Learning How To Give Is as Important as Choosing Where
If you're not figuring out how to give, you could be squandering the gift you have to offer. As studies of universal basic income are showing us, giving cash is often more important than giving items or services. You should be giving in ways that directly impact the causes that you're donating to.
If you're trying to understand how corporate tax reform may have changed your ability to give, check out our guide. Contact BRW Tax & Accounting today to discuss the most tax advantageous ways to give based on your unique tax situation.