How to Align Charitable Giving with Financial Goals

By Last Updated: May 24, 2024
charitable giving

Charitable giving is wonderful if it is not detrimental to your own financial goals. Don’t let your benevolent heart lead you into the poor house. Follow these tips to align charitable giving with your financial goals.

Take Stock of Your Resources

Start by assessing your current financial situation. Consider your income, expenses, savings goals, and short- and long-term financial plans. Determine how much you realistically can afford to donate without putting your own financial security at risk.

Create a Giving Strategy

  • Budget: Just like any other recurring expense, charitable giving should be a line item in your monthly budget. Automate your donations where possible.
  • Tax Advantages: Depending on your tax situation, charitable donations might be tax deductible. Cash isn’t always the most efficient asset to donate, so check with your financial advisor to discuss the best way for you to maximize the impact of your giving.
  • Donating Methods: As previously mentioned, giving cash isn’t always the best option. Donor Advised Funds (DAFs) allow you to make a significant charitable donation (and corresponding tax deduction) in one year and spread-out gifts over many years to come. Donating appreciated securities also avoids recognizing long term capital gains taxes.
  • Workplace Matching: Check to see if your employer has a matching gift program to match the charitable gifts that you make. Many large companies offer this incentive with a matching limit.

Striking a Balance

Your charitable giving shouldn’t derail your long-term financial goals. Remember, your own retirement security and stability should be prioritized first. Also, keep in mind that timing is everything. Sometimes smaller, regular donations over time help keep you connected to a charitable organization rather than a one-time lump sum gift. Over time, you can consider increasing your contribution as your financial ability to do so increases.

Give More Than Money

  • Volunteer with Your Time: Your time and skills are equally if not more valuable than money. Sign up for a shift at the local animal shelter, soup kitchen, thrift store, or youth program. Your time and talent are treasures to be shared.
  • Skill Sharing: Perhaps you have professional skills that could be useful to share with local non-profits. Donate your time to help redesign a website or perhaps restructure an afterschool program.
  • Donate Blood: Look for the next Red Cross blood drive. Chances are likely that you’ll see the mobile vans in your community. There’s nothing better than this free method to make a live saving impact.

Small Everyday Choices

  • Buy at Thrift Stores: Instead of always buying new, help the environment by buying second hand at thrift stores run by charities and support non-profit organizations. It helps your own bottom line and supports a good cause.
  • Select Responsible Brands: Seek out companies who donate a portion of their profits to a charitable cause.
  • Round Up at the Register: Do you get asked to round up your purchase to the next dollar for charity when you checkout? Those funds DO really go to charity and everyone’s little contributions add up, so say “yes.”

Not every charitable act needs to be legendary. Embrace the charitable mindset and you’ll find ways to incorporate your philanthropy without sacrificing your own long-term financial success.

Have questions? Feel free to contact us.

Missie Beach, CFP®, CDFA®
Senior Financial Advisor, Wiser Wealth Management

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