Maximize Your Impact with Year-End Charitable Giving Strategies

Picture of Jesse Lownsbury CPA, CFP® Candidate
Jesse Lownsbury CPA, CFP® Candidate

As we enter the holiday season, it’s easy to get swept up in the spirit of giving and generosity that often blankets this time of year. The practice of end-of-year philanthropy has become a longstanding tradition, affording both individuals and organizations the opportunity to channel the holiday spirit into meaningful contributions towards causes near and dear to their hearts. Whether you’re driven by a desire to give back or seeking out ways to maximize your philanthropic influence, this article provides year-end charitable giving strategies that can help you make the most of your generosity.

#1. Build Your Philanthropic Goals into Your Budget

The sense of fulfillment that accompanies giving back can be captivating, particularly when our hearts are drawn to causes that deeply resonate with our personal values and beliefs. The good feelings that comes along with charitable giving can tempt us to give as generously as possible and, if gone unchecked, can ultimately become an inversion of impulsive spending. However, it’s important that you don’t let your year-end charitable giving strategies jeopardize your financial well-being, regardless of the cause’s emotional pull. Remember – once you’ve donated, there’s no turning back.

To help protect yourself and your financial security, take some time to incorporate philanthropy into your budget as its own, distinct category. This not only enables you to prioritize your generosity but also establishes boundaries that help protect your financial stability, preventing you from giving beyond your financial means.

#2. Define Your Motivations and Prioritize Your Goals

The massive array of charitable causes and worthy organizations vying for financial support can be overwhelming, especially around the holidays – making it difficult to turn any of them down. However, if you genuinely want to make an impact with your year-end charitable giving strategies, then you’re going to have to be mindful of which organizations you donate to by prioritizing a select few.

Before you give to anyone, sit down and craft a list of values that deeply resonate with you and align them with an overarching mission for your charitable giving. This will give you a roadmap of sorts to help navigate which organizations you ultimately support.


SEE ALSO: Planned Giving Goes Further

Once you have a solid idea of what’s driving you to donate, then it’s time to research which charities match your mission. As you research, keep these factors in mind:

  • Program Expenses vs. Administrative Costs: Scrutinize the organization’s financial transparency. What proportion of their funds are channeled into programs that directly advance their mission, and how much is consumed by administrative overhead?
  • Organizational History: Delve into the organization’s track record. Is it a newly established entity, or does it boast a long-standing presence in its field?
  • Reputation and Community Esteem: Look into the organization’s standing within its community. What do people and other stakeholders have to say about its impact and ethical conduct?
  • Trust and Alignment: Evaluate the degree of trust you place in the organization’s leadership and whether their vision for the future aligns with your personal aspirations and motivations.

If you’d like help exploring these issues within an organization, resources such as Candid, Charity Navigator, and the BBB Wise Giving Alliance can provide you with valuable insights to support your year-end charitable giving strategies.

#3. Explore Tax-Efficient Opportunities

Year-end charitable giving strategies should blend generosity with savvy financial decision-making, offering an opportunity to leverage tax incentives and reap the rewards. Here are some tax-efficient giving options to consider:

  • Donor-Advised Funds (DAFs): DAFs enable you to make a lump-sum contribution and recommend grants to specific charities over time. When you contribute to the fund, you receive an immediate tax deduction, making it a versatile tool for extending your giving impact over the long haul.
  • Qualified Charitable Distributions (QCDs): If you’re over 70 ½ and possess an Individual Retirement Account (IRA), you have the option to donate up to $100,000 directly to a qualified charity. These donations don’t count as taxable income, however, they do count towards fulfilling your Required Minimum Distribution (RMD) requirements (if applicable), potentially lowering your tax liability.
  • Appreciated Securities: Donating appreciated stocks or other assets offers dual benefits, enhancing both your charitable contributions and your tax efficiency. This method allows donors to sidestep capital gains taxes associated with selling the investment. Instead, the investment is transferred directly to the charity and can be claimed as a charitable donation.
  • Charitable Remainder Trusts (CRTs): Another option for savvy year-end charitable giving strategies is to utilize a CRT. This tool enables you to contribute to a trust that provides an income stream to you or your chosen beneficiaries. Following a specified timeframe or upon your passing, the remaining assets are directed to the charity of your preference.

SEE ALSO: How to Donate Stock to Charity

#4. Contribute More than Just Money

When you think about year-end charitable giving strategies, you may be thinking purely from a financial standpoint. However, charitable contributions can extend beyond financial donations. If finances are tight, or you want to give more than you can afford, offering your time and skills can be just as valuable. Many organizations heavily rely on volunteers to advance their missions, and your time and energy have the potential to help them bring about significant change. Volunteering not only benefits the causes you’re passionate about but also creates a meaningful connection with others who share your values.

#5. Include Loved Ones

Engaging your family in conversations about philanthropy can be a great way to pass down your cherished financial values to your children. While philanthropy, like any financial topic, may seem deeply personal, the act of sharing your beliefs can pave the way for meaningful connections and the potential for collaborative, impactful ventures.

Incorporating These Year-End Charitable Giving Strategies into Your Financial Plan

Charitable giving offers an incredible opportunity to bring about positive change in the world, all while potentially reaping tax advantages. So long as you’re deliberate and thoughtful with your philanthropic approach, you can maximize the overall impact of your contributions. Whether you opt for financial donations, volunteer your time, or share your expertise, your gifts can help create a brighter future for those in need this holiday season.

If you’re interested in learning more about year-end charitable giving strategies that support your long-term financial plans, we’re here to help. At Wade Financial Advisory, we understand the need to align your financial plans with your personal values. Give us a call today and get started on building a financial plan that allows you to make the most of your generosity while also supporting your financial, retirement, and estate plans. We look forward to hearing from you!

This communication contains the opinions of Wade Financial Advisory, Inc. about the securities, investments and/or economic subjects discussed as of the date set forth herein. This communication is intended for information purposes only and does not recommend or solicit the purchase or sale of specific securities or investment services. Readers should not infer or assume that any securities, sectors or markets described were or will be profitable or are appropriate to meet the objectives, situation or needs of a particular individual or family, as the implementation of any financial strategy should only be made after consultation with your attorney, tax advisor and investment advisor. All material presented is compiled from sources believed to be reliable, but accuracy or completeness cannot be guaranteed. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENTS BEAR RISK INCLUDING THE POSSIBLE LOSS OF INVESTED PRINCIPAL.

Wade Financial Advisory, Inc. is an investment adviser registered with the Securities and Exchange Commission. Registration of an Investment Advisor does not imply any level of skill or training. A copy of current Form ADV Part 2A is available upon request or at www.advisorinfo.sec.gov. Please contact Wade Financial Advisory, Inc. at (408) 369-7399 with any questions.

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