Tanya Steinhofer No Comments

With the end of the year fast approaching, making charitable donations is on everyone’s mind. Not only to support one’s favorite charities but also to take advantage of the significant tax deductions available to taxpayers in certain circumstances.

In addition to receiving questions about end-of-year charitable giving, we often field questions about how clients can develop a more structured giving plan throughout the year. Below, we offer three ways to create a more structured family giving plan so you can be more charitable throughout the year, not just during the Season of Giving.

Align Your Values with Your Giving. Every decision we make, whether consciously or not, is influenced by our values. If asked, people typically have an intuitive sense of their values, but have trouble attaching words to those feelings. One of the best ways to jump-start a charitable giving plan is to clearly identify one’s values. There are several excellent exercises that can aid in articulating personal values. However, our preferred method is to start with an extensive list of possible values and then narrow down the list to end up with your top five to seven. This process tends to focus your thoughts and helps connect vague feelings to actual words.

What Issues Do You Care About? Once clear on your values, identify what causes or issues those values align with. For example, if living sustainably is a value of yours, then climate change might be a cause you want to focus your charitable dollars on. If education is a value, then access to education or financial literacy might be a cause you care about. Are there other societal problems that bother you and you want to help address?

What Charities Focus on Those Causes? After identifying a few causes that are aligned with your values and you want to address, you need to research and create a list of charities that are focused on those causes. There are a variety of websites that rate and provide information on charities. One of our favorites is Charity Navigator. You can either type in the name of a charity or a cause area. If you type in a cause, it will provide a list of charities that are involved with that cause. You can then click on each one to learn more, how effective they are in managing their resources and how to donate. We like to focus on how much of each dollar donated is going into the charity’s programs vs. covering administrative and fundraising costs. Anything below 85% going to programs is not ideal.

How Much Should We Give? We’ve noticed one barrier to creating a more structured giving plan is that people have no idea how much they “should” be giving. According to the Giving USA Foundation, an organization that tracks charitable giving statistics, in 2019 Americans gave 2% of their disposable income to charity. Disposable income is an individual’s net income which, if you receive a paycheck, is the amount you receive in a check after taxes.

There is no right or wrong answer when executing a charitable giving strategy. Any amount of money given to charity is a win for you and for society. However, a structured giving plan connecting your values to your favorite causes and charities and targeting a realistic and attainable quantitative goal, is more likely to be successful. As in any activity, allow yourself time to explore what works best for you. Don’t feel like you have to get your giving plan “right” the first time. If nothing else, charitable giving is supposed to be fun and an activity that deepens one’s sense of purpose and place in the world.