Tis the Season for Charitable Giving
In addition to investing intentionally by aligning your portfolios with your values, I believe in spending intentionally on things that are most meaningful. Studies have shown people have greater happiness when they spend on things they value, such as experiences. With the holiday season on its way, end-of-the-year charitable giving is another way to make a lasting impact on the well-being of others, and thus on your happiness. A charitable donation is a donation of a gift in cash, goods or services made to a nonprofit organization to help it accomplish its goals.
Charitable giving starts with thinking outside of ourselves. When we reflect on our values, they become more clear to us. When we assess what’s important to us, we become more aware and more intentional about giving. Start with your values and interests. When you talk to your kids, partners and friends, what do you find matters most to you? When you read the news, what current events affect you the most profoundly? Start listing out some causes that are aligned with these values, such as reducing climate change, promoting education or building up your community. Use search engines to find reputable organizations that represent your values. If you want to make an impact in your community, give locally. There are many nonprofit organizations that you can make a charitable gift to who will impact the lives of individuals and families in a meaningful way.
There are many benefits to this year-end routine. Not only do many charities rely upon this consistent, end-of-the-year support because of historical tax law, it is an emotionally gratifying time to share your own wealth. Some of my favorite charities focus on helping food instability, and this time of the year can be particularly difficult for many people. One way to organize this year-end charitable giving is by establishing a “Give to charity” bucket in your high yield savings account and to liquidate this bucket in December. Be sure to reduce your automatic savings to the “Give to charity” bucket by any sustained donation programs you might be participating in.
At the beginning of this year, the Secure Act tax law made receiving charitable deductions on your taxes more tricky. Now that most individuals use the standard deduction when filing their taxes, most people lose the most common charitable deduction through itemizing. However, there are several options available for receiving tax deductions for your charitable giving. A less involved approach might include saving up your large donations over a few years, giving it all at once, and finally itemized deductions. Gifting appreciated stocks is another option. If you are in retirement, you can take advantage of qualified charitable distributions and donor advised funds to receive deductions for your charitable giving. Giving all or portions of your required minimum distributions through a qualified charitable distribution is a straightforward way to give money to charities and while not paying taxes on those distributions. Knowing you are paying less in taxes and maximizing your contribution to a cherished charity can be a big incentive to give.
Consider making December your month to finalize your charitable giving and share the holiday spirit with others.