5 Financially Smart Ways to Give Back

Charitable giving is a great way to support causes that are meaningful to you. As the holiday season draws near, you may be thinking of ways to share your generosity with others. Need help finding the right charity? We have a few tips to help you get started.

For those who already have a cause in mind, here are some financially smart ways to give back. 

1. Volunteer your time

If you’re just starting out in your career, you may not be ready to make a large donation, and that’s okay. You can still find ways to make an impact by volunteering your time and talent to the causes you care about.

For instance, if you have a love for animals, see if any local shelters are looking for help. Interested in education or mentoring? Many after-school programs often ask for volunteers to help with tutoring. No matter what your interests may be – you can seek out opportunities that align with your passion, skills, and values.

2. Consider making small recurring donations

Charitable giving doesn’t have to come in one lump-sum donation. If you have an idea of how much you want to give each year, consider spreading out your donation across the calendar year. Small recurring donations could be easier to budget for and help show your commitment and support to a cause throughout the year – not just around the holidays. This way, your charitable giving doesn’t have to weigh on your year-end budget, when you often make room for holiday expenses (gifts, travels, etc.).

Good to know: Some charities allow you to automate your gifting, making it easier for you to set up recurring contributions over a time period that makes sense for you and your budget. Automating your gifting could help you keep track of your donations if you plan on taking a deduction for your charitable contributions when you file your taxes. Be aware that not all donations qualify for a deduction. Check with your charity to confirm whether they’re a qualified organization. You can also visit the IRS website for more information.

3. Ask about employer matching gift programs 

Many companies offer gift-matching programs in which they’ll match donations made by their employees to qualified organizations. Corporate matching gift programs vary from company to company. For instance, some may match your donations dollar for dollar up to a certain amount, potentially doubling your impact. If your employer offers this benefit, it can be a great way to help maximize your giving.

4. Think beyond cash donations

You may also consider donating appreciated long-term assets directly to your charity if you own stocks, funds, or other types of securities. Qualified donations could provide valuable potential tax savings. Keep in mind, however, that IRS rules on charitable contribution deductions can be complex, so it’s always a good idea to consult with a financial or tax professional.

Donating non-financial, non-cash assets could also be an option. Depending on the needs of the charity, some organizations may welcome equipment or property donations. Examples may include clothing, household items, artwork, or even vehicles. Certain tangible personal property donations may also be tax-deductible – talk to a tax advisor to understand the qualifying rules. 

5. Consider a donor-advised fund 

Donor-advised funds (DAFs) have grown in popularity over the years. They are a type of charitable-giving account established and maintained by a 501(c)(3) sponsoring foundation or charity. Donors may contribute cash or appreciated assets directly to the account. Generally speaking, once you’ve made a contribution, you may be allowed to take an immediate tax deduction (some restrictions apply). Talk to your sponsoring organization and/or a tax advisor to learn more.

After the DAF is funded, you may recommend which 501(c)(3) public charities should receive your assets and when. For instance, some donors choose to wait until they’re able to build a sizable donation before making a grant. Until then, your money in the account may be invested and allowed to grow tax-free.

Good to know: While DAFs can help facilitate charitable giving, they may not be the right vehicle for everyone. Here are a few things to be aware of:

• Your donations are irrevocable; contributions in the account belong to the sponsoring organization.
• Many DAF sponsoring organizations have a minimum donation requirement for opening an account, which could be as high as $25,000 or more.
• Some sponsoring organizations may have grant requirements – for instance, you may have to make a certain number of grants or grant a certain dollar amount each year.
• High administrative or account fees could reduce the amount of your original donation.