When I opened my personal email "inbox" this morning, I begged seven from organizations and friends that in one way or another I asked me to make a very meaningful contribution. I am sure I am not alone. All of us are often asked to donate to non-profit organizations.
Most of us find it easy to delete emails, discard the "junk" mail that comes in the mailbox and ignore the radio / TV ads, but we find it hard to say no to friends and family requests. The challenge is, there are many good reasons. How do you decide who gets your money?
In my thirty years as a financial advisor, I saw hundreds of clients give generous amounts of their money without any kind of strategic planning. They write a check for a couple of hundred dollars, buy a table at a fundraiser, or quietly bid generously at auction.
While many organizations "count every dollar", it is my view that your donation should not be ad hoc. Instead, do philanthropy with philanthropy and incorporate it into your overall money-management strategy. I believe that families or individuals who are fortunate enough to be able to donate on a large scale should do so with passion. There are four steps to make it.
Steps to choose wisely
Step One - Soul Search: Spend some time thinking about what matters to you. If you can't decide, try to make
Interest list test. These self-administered questionnaires ask you about your likes and dislikes and can help you find something that you feel passionate about. Include your spouse and adult children in the decision as it can help to create another generation of passionate supporters.
The goal is to focus on one or two areas. Some examples include fighting hunger, protecting children, animal welfare, arts. A focused approach ultimately enables you to donate more money to fewer organizations, which will have a greater impact.
Step two - Decide what you want your impact to be: Think about how your donation can advance your purpose. We all hope that our donations are meaningful, so it is important that you choose a charity or charity that serves your purpose. Perhaps donating pills to a school system achieves your goal of improving education
Will the funded school district make a contribution to purchasing new equipment for the hospital to provide better healthcare? Is an ongoing art scholarship interesting? Can funding Trap / Neuter / Return programs reduce the population of stray animals?
Step Three - Research donations that are aligned with your objectives: One way to get started is with Charity Navigator. Their website allows you to see a specific donation to search by name or keyword. They donate "by evaluating financial health and accountability and transparency ... show [ing] how efficiently a charity will use their support, it has maintained its programs and services over time, and accountability and transparency" Their level of commitment to. "
Once you identify some potential candidates, contact them to do an in-depth interview. At that time, you can ask specific questions such as:
What is the goal of your current capital campaign?
Can I take my donation for a specific campaign?
How will my gift matter?
How does your board inspire its team, board and donors?
Apart from my donation, what other ways can I get help for your donation? If you like their answers, then it's time to talk to your financial advisor.
Step Four - Prepare to Say No: Prepare a thoughtful script to explain why you chose that one (or two) organization. When you need help from friends / family to say "no" to ask for help for your favorite. You may get this challenge many times. But when you explain that you are increasing your giving effect by reducing your charitable focus and getting more involved, others will respect your passionate response.
Creating a Charitable Giving Plan
Sitting with your advisor is likely to be the easiest part of your journey. Together you can decide how much to give at what time and choose the appropriate vehicle to maximize your donation. I suggest that you allocate 90% of the specified sum for one or two reasons. The remaining 10% can be discretionary, for something unexpected.
A good advisor will help you consider the tax benefits of your gifting strategy, allowing you to be more lenient or save on income tax. For example, a common recommendation from creative advisors is to avoid large cash donations and, instead, to gift highly appreciated stocks. Your conversation may also include discussion of donor-aided funds, donating directly from the IRA, or setting up your own charitable trust. These discussions allow you to maximize the impact of your donation.
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