Incorporating charitable giving into your financial plan is a great way to make sure that your generosity is aligned with the things that are most important to you. Some forethought about these key issues will also make sure that your good intentions don’t throw off the rest of your long-term planning:
Have a purpose. The most effective charitable giving is thoughtful and intentional. It may be helpful for you and your spouse to ask yourselves some questions that will narrow your focus, such as:
Do we want to give to a national or local cause? Are there pressing issues in our community that we feel we can help impact? Do we have any personal connections to causes, such as medical research or support for the arts? Do we want to support friends or family by contributing to causes that impact their lives or fulfill their passions? Do we want to support a religious organization, such as our church? Are our charitable impulses motivated by ongoing problems, such as education or homelessness, or would we rather position ourselves to react to events such as natural disasters?
Do your homework. Once you’ve settled on a cause, do some research on potential recipients. Visit the local nonprofit you’d like to support and meet with its leadership team. Is the organization running itself responsibly? Are there good, competent people in charge? Will these people get the job done? Don’t sink your money into a well-intentioned black hole.
If you’re looking to give to a national organization, keep in mind that even some of the biggest names have come under fire lately from watchdog groups for misusing donations. Make sure you’re giving to an organization that’s doing what it says it’s going to do with your money.
Find out what will do the most good. There’s more than one way to give. Maybe the local adult literacy center needs volunteer tutors as much as it needs money. Perhaps you’d feel more fulfilled helping at your church’s food bank than you would feel by writing a check. Taking a more active role in a cause that’s important to you might be the most valuable thing you can give.
However, if you want to help with large-scale problems outside your own community, like hurricane recovery on the other side of the country, money is usually the most effective way to contribute. Unlike toiletries or canned goods, money doesn’t have to be boxed and shipped. You’re better off contributing to large, trustworthy organizations that already have systems and pipelines in place.
Know your limits. Especially as you near retirement age, your giving should be a planned part of your budget. If you can’t give as much money to a cause as you’d like, think about supplementing a smaller contribution with regular volunteering.
When in doubt, let your core values be your guide. Apply the same principle to your giving as you do to the rest of your life-centered financial plan: use the money you have to get the best life possible. With a little planning, you’ll make life better for those around you as well.
Securities and Advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC