Broker Check

Arlington Office

2439 North Rockingham Street,

Arlington, VA 22207

Give With A Plan

Give with a Plan...    Make your charitable giving intentional.

My tagline is Invest With A PlanSM.  When you think about your charitable giving practices, do you “Give With A Plan?”  The fact is that many people give the bulk of their annual gifts at year-end and scramble to do so.  Let me offer some ideas for how to make your charitable giving as effective as possible for both you and the organizations you support.

Use a “Core – Satellite” approach

Just like budgeting day-to-day cash flow, you should have a Giving Budget.  At the beginning of each year, sit down and decide how much you will give and to which organizations.  Some people like to allocate giving as a percentage of income; others simply take what they gave the prior year and try to increase it a bit.  If you have project-based or commission-based income that varies from year-to-year, consider creating a “carryover” category that you can fill up in the good years and use during the lean years to keep your giving pattern steady.

Many people fall into the trap of giving a little bit to lot of organizations.  While every organization will appreciate your $50 gift, it likely has little/no impact.  A more effective approach is to use the Pareto Principle – 80% of your dollars should go to 20% of the organizations you support.

In practice, choose 2-3 Core missions and/or organizations you are passionate about and direct most of your dollars here.  Your larger donations will have a greater impact because they are being focused on fewer organizations.  Other causes or organizations you want to support but are not as passionate about are listed in your Giving Budget as Satellite recipients.

With your Core recipients, decide whether you want to help by giving “general fund” (unrestricted) dollars or through “project-based” giving such as event sponsorships, seeding new initiatives, etc.  When you are having a bigger impact to a Core organization, you now should think strategically about how and where you want that impact to be felt.

In addition, allocate a few dollars to an “Other” category.  We all like to help when friends and colleagues solicit at work or through social media and this will give you the chance to say “Yes, I would be glad to help” when friends ask you to support a cause they are passionate about.  Having a Giving Budget will allow you to help, stay consistent with your overall giving plan and when appropriate, give you permission to say “No, I have allocated my giving for the year”.

Communicate with your Core recipients

Giving should start with two-way communications.  Charitable organizations are businesses and have real cash-flow needs, annual goals and long-term strategic plans.  Work with them to understand how your dollars can both fit your wishes and maximize the benefit to the organization as well.  Do not create unnecessary overhead by putting too many restrictions or demands on the use of the funds.  It is important to consider the actual or time-based costs that the recipient incurs to handle your gift.  The more constraints you place on the gift, the higher the cost and by extension – the lesser the final impact.

Find out when the best time to give is for the organization (when do they need the cash flow the most?).  By definition, your gift should not be a surprise especially if it is intended for a specific project or event.  The organization is in fundraising mode for major events and projects so knowing about your gift is important for their planning.  Remember, giving is a partnership.

In your discussions with your Core organizations, be open about the level of recognition you would like so there are never any hard feelings.  Your gifts should not be anonymous to the organization, even if you choose not to be recognized in giving reports.  All organizations will be very supportive of your wishes but still want to thank you privately (and provide important tax documents).

Finally, consider how to recognize your Core recipients in your estate plans.  You can create a legacy that extends beyond your lifetime by including a charitable organization as a beneficiary in your will or trust.  When you do so, let the organization know you have done so.  While they cannot plan on the timing or amount, most not-for-profits have benefits and information geared for their Legacy Givers.

Maximize your tax benefits

Your intent with giving should be to help advance a cause, support a need, etc. not to save on your taxes.  Once you decide to make a gift however, it makes sense to maximize your benefits.  There are several common strategies for maximizing tax benefits such as:

  • Donating appreciated securities
  • Donating directly from an IRA
  • Matching/timing gifts to your income

Let me offer a couple of general tax reminders.  Get a receipt for every donation and don’t forget vehicle/travel expenses when you volunteer.  If your charitable donations are limited because of your income, make sure you track carry-forwards carefully since they do expire.

If your “charitable giving” turns into “philanthropy”, there are many advanced strategies that play under a series of acronyms such as CRAT/CRUT, CLT, CGA, DAF, etc.  Individuals and families can also consider a personal foundation or check into your local community foundation.  Many of these tools and strategies are far more expensive than just writing a check but they provide the opportunity for your current wishes to turn into a lasting legacy.

I hope that these ideas will help you to build an intentional structure around your charitable giving practices.  Give With A Plan means:

  1. Create a Giving Budget;
  2. Designate Core and Satellite causes;
  3. Partner with your Core organizations;
  4. Maximize your tax benefits; and
  5. Consider your Legacy.

Following these steps will increase the impact you have towards the causes that mean the most to you while making your gifts as effective as possible for the organizations you support.