Charitable Giving for Tech Employees…Take Advantage of Your Unique Opportunities.

A friend of mine in the Bay Area recently learned from a local charity that women in tech between the ages of 25 and 45 are their biggest donors.

Obviously you can donate to charity regardless of age, gender, or industry, but being in the tech industry means you have some unique opportunities in your philanthropic efforts.

Why to Donate

I shall blithely set aside the notion of “because it’s your responsibility as a human on this planet to help out the more needy” (if you’re reading this blog post, I’m guessing you’ve got that one down) and focus purely on the selfish:

Giving money to others makes you happy.

The 2013 book Happy Money notes that “Research demonstrates that spending money on others provides a bigger happiness boost than spending money on yourself.” This could mean taking a friend out for coffee, or it could mean buying a malaria net for someone in Malawi you’ve never met.

The book tells us that “Investing in others can make individuals feel healthier and wealthier,” and that this seems to be a “fundamental component of human nature,” not just tied to the privileged, lucky, and affluent among us. A nice thing to hear in times like these, no?

To maximize the happiness you get from your philanthropic efforts, the book gives these pointers:

1. Make it a choice. If you donate because someone pressures you into it, you won’t feel as happy. Is there a drive going on at work? That’s all well and good, but only participate if you feel it fits into your overall charitable plans and values. Donate of your own volition.
2. Make a connection. Give money in a way that allows you to see the impact your donation makes.  
3. Make an impact. If you can donate in a way that has a specific impact, you’ll be happier. Maybe you only donate $15, but you know you’re providing a mosquito net that can protect several people.

Many charities have figured out these last two. For example, Heifer International allows you to give an actual animal–not a portion of one, not a share in a herd of animals, but an individual animal–to an individual family to help that family escape poverty. That is a really powerful story for a donor.

What to Donate

Here’s where your employment in the tech industry becomes a real factor: You likely have stock (or will someday!) from your current or former companies.

I don’t think that company stock has much of a place in your portfolio. I’ve covered this several times in previous blogs, like this one. Why double down on the risk associated with your firm, both your paycheck and your portfolio relying on the same company? In a notoriously volatile industry?

So if you have some company stock, it’s a great philanthropic opportunity.

Why? Because donating stock that has increased in value from the purchase price (that is, it has “appreciated”) is a beautifully tax-efficient strategy. You get not only the tax deduction of the full value of the donated stock (as if you’d donated cash of the same amount), but you also avoid taxes on the gain in the stock, as I described in a previous blog post. And you reduce your portfolio risk at the same time. Definitely a win-win.

When to Donate

In the tech industry, incomes are higher than average. Which means the tax rates are higher than average. Which means the tax benefits of charitable donation are higher.

And in some years, the incomes, tax rates, and tax benefits are even higher-er. Some years you’re going to exercise non-qualified stock options, get a big bonus, or your company is going to undergo some sort of “liquidity event.”

From a tax perspective, these higher-er-income years are the best years to make charitable donations.

You should probably consult an accountant, even if you’re working with a financial planner, to optimize the timing and size of your donations. In my experience, financial planners can know a lot about taxes and tax planning; they can give you a good start. And they are essential to integrating your tax planning into the rest of your financial life. But a good accountant can still blow them out of the water (and I include myself in that) when it comes to the nuances of tax planning.

Whom to Donate to

Well, now, that’s not really my place, is it? You don’t tell me who’s the most deserving recipient of my money, and I shan’t do the same to you. However, you do need to do your homework about your desired charities on sites like Charity Navigator, the Better Business Bureau (I bet they’re feeling pretty smug about snagging that domain name), or GuideStar.

If you want to help but can’t choose from allll the causes out there, that decision needs to come out of an intentional and ongoing conversation about your values and your goals. You could have such a conversation  with a friend, your partner, or a good financial planner.

Charitable Contribution 2.0

I mentioned that the timing of your charitable contribution (and therefore tax benefit) is important. But what if you could really use the tax deduction now but you haven’t yet figured out which charities you want to give your money to? A Donor-Advised Fund allows you to contribute now, get your tax benefits now, and decide later how to actually get your money to charities.

Sounds ideal, right? Well, I call this 2.0 because:

• There are costs involved in donor-advised funds. And in the same way that low costs are an essential component of effective long-term investing, they are also essential to getting more of your money to those in need.
• There are more restrictions on the charities you can use than if you donate directly.
• The donation to the fund is irrevocable (that is, no take backs).

You can learn more about donor-advised funds at Vanguard Charity. Many organizations run such funds, including community foundations and other major financial services companies such as Fidelity and Schwab.

There are several other strategies that might make sense for you, but they usually come into play when you’re a bit older and a bit wealthier: qualified charitable donations from your IRA, charitable remainder trust, charitable lead trust, charitable gift annuity.

Tips for Effective, Lasting, and Satisfying Charitable Donations

Make a plan. Yep, that old saw. You probably won’t feel nearly as connected and gratified by your giving if you don’t map it out ahead of time.  As a result, you probably won’t give as much because the motivation won’t be there. A good philanthropic plan–that address those three pieces of advice Happy Money gives–is part of a good financial plan.

Another subtle benefit I’ve discovered in my personal life: If you have to decide “give or not?” every time you see a panhandler, or every time a charitable canvasser approaches you on the street, or every time a charity calls you on the phone: that spells D-E-C-I-S-I-O-N F-A-T-I-G-U-E. With a plan, the decision has already been made.  

Make it a family effort. Vanguard recently released research advocating involving children in family philanthropy. And in a recent blog post about the book The Opposite of Spoiled, I discuss involving children in all money conversations, including charitable decisions.

Minimize the administrative hassle. I can tell you from professional and personal experience that, while donating cash is as easy as stroking a check and putting it in the mail  (ha ha! Adorable anachronism, Meg), donating stock to a charity can be a pain in the patoot.

Every time you donate stock to a charity, you will have the same administrative hoops to jump through:

1. Fill out the donation paperwork, send it to the charity, and keep a copy of it.
2. Contact the receiving charity to ensure they got it.
3. Make sure the shares leave your portfolio.
4. Ensure the charity sends you the proper tax paperwork with the appropriate numbers.

We have some Hewlett Packard stock (now in 2 new flavors!) from my husband’s previous employment there. I used to donate shares to five or more charities each year. I was overwhelmed and annoyed by the bureaucracy. Now I donate to only two each year, and simply go through my favorite five over the course of a few years.

You should consider doing the same: Donate the same amount each year, but divide it among fewer charities.

501(c)(3) vs. 501(c)(4): The Why and Whom decisions are the same no matter what cause you’re supporting. But the What and When might be moot if you’re giving to a cause the federal government doesn’t consider a regular ol’ charity.

For example, I have given to both the Sierra Club Foundation (a 501(c)(3)) and the Sierra Club (a 501(c)(4)). I can deduct donations to the former, but not the latter. They are both non-profits, but the government allows deductions only for one.

All of these tips make your personal philanthropy more enjoyable (or less annoying), more gratifying, and therefore something you’re more likely to continue.

Question: What’s holding you back from following through on your charitable inclinations? You can leave a comment below.

Do you have a bunch of company stock that you want to get rid of? Are you wondering how to make the biggest impact with your charitable dollars in a way that works best for your personal finances? Reach out to me at  or schedule a free 30-minute consultation.

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Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. I encourage you to consult a financial planner and/or an accountant for advice specific to your situation. Reproduction of this material is prohibited without written permission from Meg Bartelt, and all rights are reserved. Read the full Disclaimer.