How to Make the Most of your Charitable Giving

One of the biggest mistakes that people make when it comes to giving back is not having a strategy for their charitable contributions. By default, many people put off charitable giving to the end of the year to beat the Dec. 31 deadline for donating to qualified charities. To make the most of your giving, start to plan your charitable gifting strategy for the entire year now.

Here are five steps to consider to get a jump on your gifting strategies for this year:

1. Estimate how much you’d like to contribute this year. Just as you plan how much of your income to set aside for retirement or to meet other financial goals, the same should be true for your charitable contributions. Determine what percentage of your income you plan to dedicate to your favorite causes. You may want to establish a savings account dedicated to charitable giving and have money from each paycheck set aside into this account.

2. Identify your favorite charities and give earlier in the year. Although charities often make a year-end push for donations, they are happy to accept money at any time of year. These organizations have cash flow needs month after month. Consider establishing a monthly contribution via a credit card or authorization from a bank account. Make sure to check with your employer to see if they offer any sort of gift match or giving program. In other cases, you may want to write a check to specific charities on a quarterly basis. Either option would help organizations meet their financial obligations throughout the year.

3. Do your homework. If you are familiar with your favorite charities and confident that your money is used wisely, you should feel comfortable making contributions to them. If you aren’t certain, ask the organization to provide financial information and an explanation of how they accomplish their primary objectives. Do your homework and search for an objective assessment of an organization’s effectiveness.

4. Find time to volunteer. Today more than ever, organizations need volunteers to help accomplish their goals. While your money means a lot to them, so does your time. Try to build volunteerism into your calendar. It is a great way to give something back.

5. Take advantage of annual gift tax exclusions. If you have a large estate that you are trying to reduce in order to avoid potential future estate taxes, you can make yearly gifts to anyone of up to $14,000 per person free of gift tax consequences. That means one married couple could gift up to $28,000 per year per recipient without incurring gift tax consequences. The ability to make gifts annually without tax is a major benefit for wealthier households that would like to reduce the size of their estate. Make sure to check with your tax advisor if you have questions about the potential tax consequences of your giving strategy.

Rob Davis lives in University Place with his wife Lorri and sons Wesley and Parker. He is a Financial Advisor and CERTIFIED FINANCIAL PLANNER practitioner™ with Ameriprise Financial Services, Inc. in Tacoma, Washington. Rob specializes in fee-based financial planning and asset management strategies and has been in practice for 37 years. He is licensed/registered to do business with U.S. residents only in the states of Washington, Idaho, Arizona and California. You may contact Rob at ameripriseadvisors.com/robert.g.davis.

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