If you have the means and desire to financially contribute to charitable organizations, it’s important to understand how and why you are allocating your funds to the causes you care about. Here are a few considerations and tips to ensure you’re being strategic when planning your charitable giving while making the most impact.
Giving USA 2022: The Annual Report on Philanthropy for the Year 2021, reported that total charitable giving in 2021 grew 4.0% from 2020 to a total of more than $484 billion. As needs and donations increase nationwide with inflation on the rise and a potential recession ahead, it’s important to understand your personal goals and desires to ensure your contributions are making a meaningful impact to the causes you care about.
Pick your passion
With all the options to make an impact, it can be overwhelming to decide where to donate your funds. Consider the causes you are passionate about and identify organizations that match the cause.
From healthcare studies to humane societies, there is sure to be a charity that fits your passions. As part of your research, determine the organization’s public presence by reviewing annual giving reports, social media, press releases and partnerships. Also, review ratings given by third-party sources, such as Charity Navigator or other rating organizations. These ratings can help individuals understand how efficiently a charity will use their support, how well it has sustained its programs and services over time and their level of commitment to good governance and openness with information.
Spread the love
You don’t have to limit yourself to one charitable organization. If you’re passionate about different causes, consider splitting your contributions between various charities to spread the love and make more of an impact.
You can also consider donating to one organization, while volunteering your time with another. Giving back with your time can be just as meaningful to the charity and gives you a chance to develop a meaningful connection with the organization you decided to support.
Consolidate your giving
Rather than donating smaller amounts annually, consider consolidating your giving to every three or five years to make a bigger impact on one organization or cause. This could also help you reach the annual amount for a charitable giving tax deduction. For 2022 taxes, single filers may claim a $12,950 standard deduction, while married couples filing jointly can claim a $25,900 standard deduction. Compared to 2021, this is an increase of $400 for single filers and $800 for married couples. This method also provides a significant boost to your selected charity.
Budget for giving
If you’re ready to begin consistently contributing to these causes, consider making charitable giving part of your budget. Using the spend, save and share budget method can help you create a formula that works for your personal finances. For example, you can allocate 50% of your take-home pay to your spending funds, 30% to savings, and 20% to sharing or donating.
While your personal breakdown might look different, the underlying philosophy for planned giving remains the same. Also, be sure to maximize your giving by taking advantage of any employer match programs your company may offer.
Take advantage of employer matching gift programs
If your employer offers an employee matching gift program, be sure to review the criteria to ensure your cause and/or charity qualifies. From there, you can leverage your employer’s match each year to avoid leaving donation money on the table. These programs not only bolster your donations to do more good, but also help your employer contribute to worthy causes in their communities.
Involve the whole family
Talk with your family and children about your charitable giving plans and why this is important. Include them in your plans and invite them to volunteer alongside you. Also, discuss what causes are important to them—especially if they are different from your own—and let them pick who they want to support. This will set a strong foundation of charitable giving and volunteering for them as they grow older.
Build your legacy
Depending on your financial situation, ensuring your donations are continuing once you’ve passed is a great legacy to leave, but does require thoughtful planning. There are many options to achieve this. For example, consider including charitable contributions in your will or establish a dedicated memorial fund in your name where people can submit donations.
Wherever you are on your charitable giving journey, taking the time to think through where you most want to make an impact and what charities align with your passions is a great start to ensuring you are making the most of your dollars. Remember even a small donation can have a big impact on an organization as we navigate the cycles of the economy together.
Abby Wendel is president of consumer banking at UMB.