Before you write a check to a charity, follow these steps first.
Evaluate Why You’re Giving
It's important to know why you want to give. While it’s admirable to donate to a charity on a whim, strategic and planned charitable giving may have a greater impact on both your financial situation and your charity of choice. Choosing to give is a highly personal decision, so it deserves time for consideration. Think through your values, the causes that you find important, and whether you’d be better off giving your time, your money, or even both.
Along with helping out others and feeling good about making a difference in someone’s life, charitable giving also enables you to set a good example for your peers and children. You can teach your children about the importance of giving back and using money for a good cause rather than a toy that happened to grab their attention while you were shopping.
Lastly, there can be potential tax benefits when you donate, namely in the form of deductions. This will depend on how you choose to give, whether it’s cash, gifts in trust, donor-advised funds, or another form. Even if you’re donating solely to give back, it’s important to understand the potential tax benefit.
Decide How Much to Give
Don’t assume you can’t give back if you aren’t a millionaire. Even small donations are better than nothing. According to Harvard Health, giving from an early age can help you feel happier and more grateful. Giving what you can this year is an excellent way to get started.
Set a goal of how much you’d ideally like to give each year. Then, build it into your monthly budget so the donation isn’t a “surprise” to your cash flow at the end of the year. You may decide you’d rather give smaller amounts more frequently, such as $25 per month, instead of one lump sum, such as $300 per year. Don’t forget to check to see if your employer will match your donation. This can help make smaller donations more impactful.
Remember, there are other ways you can give back if you’re under financial strain. Many charitable causes have a greater need for volunteers than donations, such as organizations supporting social interaction for children or the elderly. You may also consider giving your professional skillset by working pro bono for a cause you’re passionate about.
Choose a Charity with Meaning
Rather than donate to the most popular charitable organizations, select charities that have a meaningful purpose to you. This may be animal rights, education for children, the environment, or another initiative. Take time to research organizations both on the local and national level to find one that speaks to you. Finding a charity that aligns with your values can help you feel more connected to the cause and stay motivated to continue giving.
Remember that not all giving is created equal as not all organizations use donations the same way. The charities that spend the most donated dollars on marketing are probably the first ones you're likely to recognize and who contact you consistently. Vet each charity you consider to make sure your donation is going to your intended recipient. One way to do this is to look up the organization on charitynavigator.org or The Better Business Bureau’s Give.org. You can verify their legal status, check their records, and more.
If your budget and financial plan allow, charitable giving can be a great way to add purpose to your money. Contact your Trilogy advisor today for assistance!