The vast majority of my clients say they want to give more to charities and causes they care about, and, importantly, be more structured and formal in their giving.
Alas, many of them have not actually started giving more or created a structure around charitable giving. And this has been bothering me for a while, as charitable giving is important to me (because we live with such unbelievable abundance, who are we not to share with those who don’t?), and I have clearly failed in enabling my clients to do it better.
[Please do understand that I understand that Circumstances Exist. Not everyone has the ability to give money away. My fist-shaking isn’t for you!]
As I wrote about in my last blog post, I think part of the hindrance is that people get wrapped up in the tax issue. We all know donating to charity can help reduce your taxes, so we want to figure that out before we donate. And then we don’t figure it out (because it can get kind of complicated), and so we don’t donate. Blerg.
I present to you Two Very Easy Ways to donate to charity. If you want to use your abundance to help your community and your world, and you’re not doing it yet, just pick one and go.
The Two Easiest Ways to Give to Charity
#1 easiest way to reliably give to charity: Set up a recurring monthly donation online.
Go to the charity’s website. Click the Donate button. Program in your damn credit card number for a recurring monthly donation, click Submit, and be done with it.
Sure, there are some inefficiencies in that the charity doesn’t get your full dollar amount because of credit card fees, but they’re getting almost all of it, which is better than completely all of a donation that never gets made.
Donate through your paycheck and have your company match the amount.
Not all companies offer this, but some major names in tech do:
You can search for your company here (or, you know, in your employee benefits package, but who looks at that?!). This website is intended for charities to help market to employees through employers, but you can still use it to find out about your own company.
Two benefits here:
- You have to do some “paperwork” to set it up, but then it just goes. No need to remember to donate to the charity again.
- The charity gets double the money!
You could even say to yourself, “Hey, if I want to give that charity $2000, I could actually give them only $1000 and my company will chip in the other $1000. That leaves me with $1000 to either donate somewhere else, or use for some other worthwhile purpose.”
If You Have the Donating Thing Down, and Want Some Tax Benefits (and are willing to do some work)
These are the techniques that we financial planners get soooo excited about. But I’ve come to realize that they often get in the way of actually supporting the causes we care about.
Is your number one value to save money? Then don’t give any money to charity. Screw the tax deductions.
But if your number one value is to support causes you care about, then don’t let the taxes get in the way of your support.
If you are organized enough, and you have the financial situation to do something a little more complicated, then sure, let’s do this thing. Here are two tax-savvy ways of donating to charity:
Donate appreciated stock.
Being in tech, you likely have some company stock that (god willing) is now worth more than it was when you received it. Or maybe you simply have other investments that have gained a lot in value.
In any case, if you have an investment (stock, mutual fund) that has grown a lot in value, it’s a great thing to donate to charity: they get money and you get a double tax benefit.
“Bunch” multiple years of contributions into a single year.
What is this sorcery? Instead of giving $10,000 every year, give $40,000 in one year, and then don’t give again for another three years. (You can bunch as many years as you want. I simply chose four for this example.)
Why would you do this? Because in that bunched year, you get to itemize your large charitable deduction ($40k is way over the standard deduction of $12k for a single person, $24k for a couple), and in the other 3 years, when you don’t have much in the way of itemized deductions, you get to take the newly-large-since-2017 standard deduction.
Charities get the same amount of money over the course of four years. You donate the same amount of money. But you get more tax benefits.
If you want to share your abundance with people and causes in greater need than you, and you want help figuring out the most effective way to do it, please reach out to me at email@example.com or schedule a free 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, accountant, and/or legal counsel 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.