Charitable Giving Plan: How to Invest in Things You Care About

 In Ozarks Live, Financial Planning, Tips

Generosity is alive and well.

Americans gave an estimated $427.7 billion to charity in 2018, according to Giving USA’s Annual Report on Philanthropy.1

But with so many nonprofits vying for your dollars, how do you decide which ones to support, and how much to give?

In general, planned giving is smarter than impulse giving. Take some time to think about which causes are most important to you, and which organizations would use your gifts most wisely.

Here are some tips for setting up a smart charitable giving plan so you can pay it forward with confidence.

Research Before You Give

Once you have a good sense of the causes that are nearest and dearest to your heart, do some digging before you write out that donation check.

  • Carefully research organizations whose work aligns with your priorities. What is their mission? What specific work do they do? How do they use donations?2
  • Watch out for scams. Unfortunately, there are fraudsters who take advantage of our generosity by setting up fake charities.2 The good news is there are sources that will tell you if an organization is legitimate. These include Charity Navigator, Guidestar and the BBB Wise Giving Alliance.3
  • Contact organizations directly if you have questions. Most nonprofits are happy to provide more information to prospective donors. Ask for details about how they will use your money. Will it go to mission-specific activities or to offset overhead? Do you have the option of specifying how your gift is used?2

Set a Giving Budget

Many people would like to give more to charity but fear they can’t afford it. The key to effective giving is to set a budget for donations, just like you do for other expenses.

  • Establish and review your giving budget at least once a year. It’s generally more effective to make a few large contributions to just 1-2 organizations than to spread out small donations across several charities.3 
  • Supporting the same organizations on a consistent basis actually helps them plan their own budgets more effectively. It also frees them up to invest more of their resources into mission-focused activities and spend less on fundraising appeals.3 
  • Decide whether to donate annually or monthly. Many organizations prefer monthly donations, which give them a more predictable, consistent source of funding compared with annual or one-time gifts.4 
  • Want to make giving even easier? Consider recurring donations through your bank account or credit card.5 

Consider Tax Implications

First off, not all contributions are tax-deductible. Here are some of the circumstances you’ll want to be aware of.

  • Not all nonprofits qualify as charitable organizations. Those that fall under section 501(c)3 qualify for tax-deductible donations. 
  • Those under 501(c)4 do not. The exceptions include volunteer fire departments and veterans organizations with over 90% of their membership comprised of war veterans.
  • Buying merchandise for a fundraiser, or receiving personal benefits for donating, is not tax-deductible. This includes buying lottery or raffle tickets, donations in return for athletic tickets or other perks, or buying products from AmazonSmile or other companies promising to donate the proceeds to charities.
  • Contributions to political candidates, parties or political action committees are not tax-deductible.
  • Informal giving, such as helping a family member with medical bills, is also not tax-deductible.

Timing and documentation also matter. 

  • A pledge is not a donation. If you sign a pledge in 2019 to make donations in 2020, you may not claim a deduction on your 2019 tax return if you haven’t actually made the donation.
  • Always get a receipt when you donate. The IRS requires documentation before you can claim the deduction.6 

Will your itemized deductions exceed the standard deduction? 

  • For 2019, the standard deduction is $12,200 for single filers and $24,400 for married couples filing jointly. 
  • Itemized deductions include charitable contributions, mortgage interest, and state and local taxes. Increasing your charitable donations may help to push your total above the standard deduction.7

Consider setting up a donor-advised fund (DAF). 

  • One of the most popular ways to give today, a DAF is a charitable savings account that grows tax-free. If you itemize, you may qualify for a tax deduction for the year in which you donate.8 
  • DAFs let you donate cash, real estate, stocks, bonds, mutual fund shares or other publicly traded securities.7 
  • A number of organizations offer them, including individual charities, colleges and universities, community foundations and major fund companies. 
  • Most require a minimum investment of $5,000 or more, and fees are typically less than 1%.8 

If you’d like to set up a charitable giving plan but aren’t sure how to get started, contact The Resource Center.

We will help you develop a customized plan that benefits the causes that matter most to you, while also meeting your own needs.


Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and The Resource Center are not affiliated companies. Neither the firm nor its agents or representatives may give tax or legal advice. Individuals should consult with a qualified professional for guidance before making any purchasing decisions. Investing involves risk, including the potential loss of principal. 00401763










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