By FPA Members Elaine King, CFP®, CDFA™ and Philip Herzberg, CFP®, MSF
Last Updated: November 17, 2010
With the holiday season rapidly approaching and uncertain and challenging economic conditions prevalent, you should highly consider giving a gift that has a longer duration and impacts the wellness of many people in your community. Keeping in hindsight that total charitable giving in the U.S. declined 3.6 percent in 20091, you can certainly still give to others and make a personally gratifying and altruistic impact to those with heightened needs this holiday season by following these all-encompassing insights:
Evaluate donating cash and services to local charities and community groups in need of your financial support and volunteerism
- Due to the evolving financial climate, you can be perplexed about how to optimize your philanthropic giving and year-end tax planning when overwhelmed with a variety of charitable organizations that could utilize your resources. Assessing how much to efficiently give may involve selecting the organizations you care most about and contributing the appropriate items and cash to make a difference.
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Are you passionate about giving to a local cash or services-strapped charity or devoted endeavor? Encourage family, friends, and co-workers to join you in volunteering to assist a community group (i.e. United Way, Daily Bread Food Bank) in significant need of free services. Check out the charities you are thinking about at CharityNavigator to choose an organization you can relate to and decide which organization(s) can make maximal use of your donation.
Purchase gifts which provide a percentage to charity
- Establish and incorporate charitable contributions as a monthly part of your finances. By planning ahead and budgeting for gifts to family, friends, and philanthropies, you can set aside the money for giving at the holidays and even the future on a periodic basis.
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Can you afford both gifts and charitable contributions this holiday season? Combine the “best of both worlds” and types of donations and buy electronic gift cards that provide a percentage to the charity of your intentions or purchase gift certificates redeemable by recipients at the charities of their choice. Peruse online networks, such as Justgive.org, to review and set up a diverse online list of desirable local, national and international charities.
Strategize your 2010 end-of-year charitable giving by being cognizant of income tax, and estate planning and gifting provisions
- Recognize that you are allowed to gift up to $13,000 per year to as many donees as you choose, without paying any gift tax. If you select to make more substantial gifts during your lifetime, you should realize that the current federal lifetime gift exclusion is $1 million (gifts between you and your spouse are not subject to gift or estate tax if you are both U.S. citizens). Also, do not forget to itemize your deductions on Schedule A to claim a deduction for your charitable contributions (this deduction is not available to you if you opt for the standard deduction on the form). Seek the collaborative assistance of a financial planner, qualified tax or legal professional to strategize donations in accordance with your goals and family aspirations.
- Make a concerted effort to learn relevant and timely provisions with the guidance of a financial planner and tax professional about appropriate charitable strategies, such as donating appreciated long-term securities to someone in a low-income tax bracket this year. Save money in estate taxes with the help of a legal professional and consider viable alternatives, such as leveraging a gift to charity through outright bequests in your will or gifting through charitable trust vehicles (i.e. Charitable Lead Trusts and Charitable Remainder Trusts).
By giving on behalf of someone else, you are also encouraging others to share, especially to those who have everything and to your children who are just learning the benefits of philanthropy. In essence, giving to the community is your contribution to being a citizen of the world.
Keeping these perspectives in mind, you can easily fulfill your philanthropic desires and personally connect to your communities in a meaningful way this holiday season by charitably giving your money and volunteering your time to support needy causes.
FPA member Elaine King, CFP®, CDFA™, is the Author of Family & Money Matters. FPA member Philip Herzberg, CFP®, MSF, is Director of Media Relations & Public Awareness for FPA of Miami-Dade.
1 Giving USA 2010: The Annual Report on Philanthropy
