Too often, it can feel like there are so many worthy causes in the world that we don’t know where to start. A good jumping off point is to focus on causes that align with your values, and ideally are managed by people whom you trust. Being proactive about selecting the causes you choose to support can make it easier filter out the many requests for financial assistance that we receive throughout the year.
Think of generosity as a practice, something we cultivate more strength in with experience. When it comes to giving money or time, two things most people feel scarcity around, it can be challenging to find balance. What happens when you give something you don’t really have to give, such as saying yes to donating time when you already feel overextended? Guilt and fear become entangled in the process and you don’t get to truly experience the generous act.
To counteract this, decide to experiment with generous giving, free from guilt or fear. Reflect on the ways you’re already being generous in your life. Then compare the times you’ve given with an open heart with the times you’ve given from scarcity or a sense of obligation. Seeing the stark contrast between these situations can aid you letting go of old patterns and allow you to focus on giving from the abundance in your life.
Donor Advised Funds (DAF), A Great Tool For Giving!
DAFs are like your own personal foundation without the hassle and expense. The minimum to open a DAF is usually $5,000 and you can fund it with either cash or assets (appreciated assets can be an ideal funding source). You can even pre-fund several years of giving in advance to maximize tax advantages.
Using a DAF accomplishes several things at once:
- It prompts you to think in advance about giving. Having an internal conversation earlier in the year will make you feel proactive. You can give throughout the year rather than doing it all at the late December deadline.
- It can provide you with an easy response to requests for contributions. “I do all of my charitable giving from my DAF”.
- It allows you to use appreciated securities to fund the account. Rather than paying capital gains taxes on your investments to create the cash to fund it, you simply transfer the appreciated securities into the DAF. For example, a mutual fund you bought for $1,000 is now worth $10,000. If you donate the stock to the DAF instead of selling it, you don’t have to pay capital gains tax on the $9,000 of growth.
Giving through a DAF should involve coordination with your tax preparer and financial advisor. This coordination can help ensure optimization of your giving strategy.
Giving In Non-Financial Ways
Giving doesn’t always mean financial, especially if you consider the “3-Ts” approach:
- Time – For some people time is a more readily available resource than money. This can also be a more fulfilling way to support causes we feel passionate about.
- Talent – You know what you’re good at, so find a way to share that talent with your favorite charities. This can add a lot of leverage and value to the time you are giving.
- Treasure – Treasure doesn’t always mean money. Think of treasure in terms of what your favorite charity needs most. Do you have possessions you no longer use that could be of value to organizations you support?
Studies show happiness comes from giving to others. Effectively planning how you’re giving can exponentially increase benefits to all involved!