Charitable giving strategies for the holidays

fortpitt in Wealth Management 8 December, 2014

As we near the holiday, people have become increasingly interested in charitable giving. Here are a few key thoughts for those who are considering making a charitable gift before the end of the year.

A successful giving experience depends primarily upon “charitable intent.” That is, the donor’s primary concern must be, first and foremost, their desire to help a charity. While there are financial benefits that can be derived from charitable giving, these are always secondary. Supporting a cause that you believe in, sharing in a mission and – for many – participating in a community of common concern can provide intangible benefits that can never be financially measurable. The financial benefits are generally not sufficient on their own to warrant making a gift without concern for the specific charitable recipient. For this reason, the second criteria for a successful gift is that you…

Know the charity’s mission and support its vision. For those who are new to charitable giving, it’s important to identify an organization or cause that serves a purpose that you passionately support. You have a wide array of options available to you to do just that. If you are just starting out, you may wish to consider a small, local charity. Many of these organizations desperately need support, do not have the resources to promote their activities widely and offer a unique opportunity to see your gift at work. While the impact of your gift may not be as evident when giving to larger, national non-profits, these groups often seek to make an impact on enduring issues – issues which can often only be addressed by pooling substantial resources. Whichever group(s) you choose support – large or small, national or local – it is important that you share that group’s mission and vision. Ultimately, a charitable gift is an investment in your values.

A suitable donation will reflect both your commitment and lifestyle. When donating, your gift should be consistent with your level of commitment and with the lifestyle you want after you have parted with the proceeds.  That is, a successful gift will not undermine your ability to fulfill future financial obligations or objectives. If you are considering a sizable gift, you will want to discuss the impact of that gift with your financial advisor. For those who do not expect to need portfolio income, it may make sense to consider a significant gift. For those, however, who are relying on their portfolio to realize their financial goals, it is vital make sure that the remaining portfolio will be able to comfortably support the cash flow you need.

Identify the most financially beneficial way to donate. As a donor, you will also need to consider how to make the gift in the most financially beneficial way – to both you and the charity. While cash is always welcome, you may want to consider donating highly appreciated stock to the charity of your choice. It is essential that you talk with your tax advisor about which approach is most advantageous for you. Giving the stock offers a number of benefits; in addition to receiving meaningful tax deductions, you can also avoid capital gains on highly appreciated holdings and reduce your exposure to the risk that arises from holding a significant position in a single company.

Charitable giving is a wonderful thing to do. As we approach the holidays and a new year, this is a great time to consider contributing to a cause that is important to you while receiving some financial benefits. Sometimes you really can do well by doing good.

Please contact your financial consultant or tax advisor if you have any questions or concerns.


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