Charitable giving can help transform the work of not-for-profit organizations that rely on donations to serve individuals and communities in need. A financial advisor with expertise in tax strategy and estate planning can help your generosity stretch even further.
When people believe strongly in a cause, they often wish they could do more to support its mission. What donors may not realize is that every gift has the power to create a ripple effect.
“I always say that small gifts are what will cure cancer,” says Renee Kurdzos, Executive Director of Planned Giving at Fred Hutchinson Cancer Research Center—known as The Hutch—in Seattle. “They’re the ones that enable us to do pilot programs and to get those crazy ideas out there, such as our pioneering work in bone marrow transplantation.”
Likewise, relatively small adjustments in your approach to supporting nonprofits like The Hutch can dramatically increase the value of each donation and create other significant benefits for you. The possibilities start coming into focus when you connect charitable giving, estate planning, and tax planning within a holistic wealth management strategy.
“I love having those client conversations—where we dive really deep into what types of assets they may choose to donate, what their tax situation looks like, and what kind of legacy they want to create,” says Josh DeForest, Managing Director at Mercer Advisors. “Those answers actually shed a lot of light on how to do charitable giving more effectively in the context of someone’s financial plan.”
Kurdzos and Colby Bircher, Vice President and Charitable Planning Consultant at Fidelity Charitable, recently joined Josh DeForest of Mercer Advisors to discuss strategic options for supporting nonprofit causes. Their advice? Plan ahead, be creative—and don’t hesitate to reach out for guidance.
“Philanthropy comes in all different shapes and sizes,” Bircher says. “But you don’t have to be an expert on this topic. You can really lean on people like Josh and me to help explain the different options.”
In 2019, Americans gave more than $450 billion to charity, of which about 71% came from individual donors.1 Among those accustomed to writing a check, charging a credit card, or handing over cash, many are unaware of other strategies for donating to charity that have even greater potential impact.
For example, a variety of planned giving vehicles give people flexibility to spread their charitable contributions across different charities and over the course of many years while earning an immediate tax deduction in most cases.
These options include:
Each vehicle has different advantages, as well as limitations, that are best discussed with a financial advisor in the context of a person’s overall financial plan before choosing which option to pursue. An advisor can also help identify related opportunities to increase charitable impact. For example, if an employer offers a matching gift program, it might be able to contribute directly to a charitable trust or donor-advised fund.
Another beneficial option, either apart from or in tandem with a planned giving vehicle, is to transfer non-cash assets to charitable organizations. Examples include:
Donors naturally want to be sure they’re supporting organizations that are reputable, ethical, and responsibly managed. Kurdzos recommends some top criteria for sizing up a nonprofit:
Most, if not all, of this information should be readily available on the organization’s website or from independent ratings sources such as GuideStar and Charity Navigator.
Kurdzos encourages those who are interested in maximizing their impact through philanthropy to contact their favorite charities for specific guidance.
“The main thing I typically ask folks to consider is giving unrestricted support” as opposed to directing their contributions toward a specific program, branch, or beneficiary, she says. “It’s so easy to get caught up in and love a project, and that might be what brings you to a charity to begin with. But it’s often those unrestricted dollars that allow us to be nimble, especially in times of crisis.”
Beyond making a financial gift, Kurdzos says, donors can multiply their impact by acting as ambassadors for a charity among their family, friends, and co-workers.
“Post about us on social media, invite people to our events, and let them know why you care about our organization,” she says. “And, of course, we can always use people’s time and expertise.”
Although the options available to people interested in charitable giving are practically limitless, they don’t have to be overwhelming. DeForest recommends three foundational steps toward optimizing the ways that you donate:
“The key with all of these things is making sure that you’re looking at them holistically,” DeForest says. “When you have that comprehensive picture, the recommendations become a lot clearer because you know what all of the moving pieces are.
“Then you can have a bigger impact in your charitable giving,” he says.
Want to learn more? Replay the full webinar on charitable giving and tax planning strategies.
1 “Giving USA 2020: What Are the Implications for You?” Nonprofit Quarterly, June 23, 2020.
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