By FPA member Amy Jo Lauber, CFP®
Last Updated: May 18, 2010
The ability to share your resources — whether it is money, time, talent or wisdom — is a critical element in feeling abundant and alive. With so many worthy causes, organizations and people (not to mention animals) that need your help, it may be a challenge to develop a giving strategy that suits your unique values and situation.
The first step is determining which cause(s) and/or organization(s) you feel most drawn to, for which you feel the most concern, or for which you feel you can make the type of impact you desire. A fair amount of introspection is required. List all the causes you would like to help, and then prioritize them. List any hesitations you might have. For instance, you may want to help a hospice center, but may hesitate because you struggle with the moral or religious aspects surrounding end-of-life issues. There are also web sites that can give you details about a particular organization that can also be helpful. Those details include the organization's operating expenses, how much of your dollar goes to the organization's goals, and the like. One such web site is Charity Navigator.
Next, imagine that you only have $100. Allocate your imaginary $100 among the organizations you listed. This will give you a percentage to use in real life.
Once you've determined your recipients, the next step is to decide how much you are willing and able to give both now and in the future. There are several methods for giving to charities. Certainly writing a check is the easiest and most popular, but you may also gift shares of stock, especially if it's stock that has a low basis that you haven't sold due to concerns about capital gains taxes. In addition, there are:
- Charitable trusts, which provide either you or the charity with income for a specified time with the remaining value passing to charity or you/your beneficiaries, respectively.
- Gift annuities, which provide an income stream to you and gives the remainder value to a charity.
- Bequests, which you can make through your will or through a beneficiary designation such as an Individual Retirement Account (IRA) or life insurance policy.
With the help of a financial planning professional, you may analyze your cash flow, income taxes, and the projected future values of your assets using different scenarios, assumptions and dollar amounts. This exercise may provide you with ideas and suggestions along with encouragement and support.
Lastly, complete your gift(s) and feel the joy that comes from sharing your resources.
Your professional advisers, including your financial planner, tax accountant and attorney, can guide you more thoroughly and detail the documentation required and tax benefits available for each strategy. If you would like more ideas and stories about giving, consider reading former President Bill Clinton's book: "Give."
FPA member Amy Jo Lauber, CFP®, is Director of Financial Planning at Harold C. Brown & Co., LLC.