Originally published by Raymond James.
Making your charitable donations in mindful ways that support your values can maximize their impact.
No matter your net worth, charitable giving can be an energizing endeavor. Fueling change, helping those in need or breathing new life into organizations you feel passionate about are all exciting ways to engage with the world – and often bring unexpected benefits. In fact, 74% of high-generosity people report higher rates of satisfaction with their friendships, family connections and careers.
Get granular.
Establishing your core values is the first step in defining a well-thought-out road map for giving. This is your personal “why,” and it will be as individual as you are. Only you and your family understand your underlying philanthropic passions – whether they be for art, the environment, equity and equality, social justice, children’s welfare, animals, healthcare or some combination of the above. To get down to your true philanthropic philosophy, be as specific as possible with your intentions. If the environment is really important to you, are you interested in wild animal welfare? Or saving savanna grasses?
Get clear on what you love, what lights you up, what you care deeply about. Like with many money matters, an annual review of your core reasons may be in order if your viewpoints have evolved over time.
Get answers.
Putting your philanthropic intentions into a focused plan can be a challenge. Are you a “I want to see my money in action right now” kind of person? Or would you rather have more of an impact down the road? Maybe you’re both. Or maybe it depends on the cause itself. The pandemic, for example, drove many to give to community agencies on the ground, touching lives in very real ways in as close to real time as possible.
So ask yourself: Do you wait to donate or deploy funds today? Do you want to see your giving dollars in action during your lifetime? Or would you prefer your generosity to live on once you have passed away?
These are highly personal questions that get to the heart of your philanthropic philosophy. And deserve contemplation. Your answer may change depending on the issue at hand or your life stage. Or you may feel obligated to effect change now and later. The point is to raise the questions and decide for yourself how to align your values and goals with your philanthropic dollars.
Only you can figure out the answers for yourself. If you value creating philanthropic solutions in the here and now, you may prefer to use vehicles and align with local nonprofits that actively work in the immediate areas you wish to impact.
Others may prefer tackling larger problems with a more long-term view, reserving their largesse to deploy when they find a nonprofit with game-changing ideas. In some cases, donating a larger amount at an opportune time creates more effective, sustainable long-term solutions. A marathon versus a sprint, if you will.
Get aligned.
You also may grapple with the “how” of donating. There are straightforward monetary donations to a nonprofit of your choice, of course. But other specialized vehicles may align better with your philosophy. Donor advised funds, for example, could work for both the now and the later philosophies. They’re flexible vehicles, but individual advisors to the funds tend to wait until just the right charity comes along before granting funds.
A charitable remainder trust offers another option. This irrevocable trust offers a tax deduction now, income for you, and allows charities to benefit down the line. The assets generate an income stream for a set number of years (or for life) and the named charity receives the remaining assets at the end of the trust term.
On the other hand, charitable lead trusts might work better for those who want to see their impact within their lifetimes and don’t necessarily need the income. Your favorite qualified charity receives an income stream for a set number of years, and the beneficiary of your trust receives the rest afterward. A great way to keep a cherished asset within the family and benefit others.
These different vehicles have different tax implications, so you’ll want to discuss that with your advisor and accountant.
Finding your philanthropic style can be a source of joy – just as helping the organizations you care about is. Take the time to identify your core values for a more aligned and intentional giving strategy. And, of course, allocate a budget in conjunction with your professional advisors.
Please be aware that there may be substantial fees, charges and costs associated with establishing a charitable remainder trust.
Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.
