Lots of checks get written on December 31, when people accustomed to supporting charitable organizations make their annual donation. However, giving can be part of an effective tax and estate plan throughout the year.
Did you know that summer is actually the hardest time of the year for families in need? Children who depend on school-provided nutrition programs, often go hungry when school is out, or during long holiday breaks. Schools often plan their annual scholarships which are given in the spring admission process, so gift to education institutions are needed then. That’s another reason why it’s good to make giving a year-round habit.
Forbes’ recent article, “5 Giving Tips For Smart Donations,” provides five key giving tips:
- Align Targeted Charities and Non Profits with Your Personal and Social Goals. Think about your key passions, what organization which may have made a difference to you or your family by providing aide, scholarship and guidance. See which institutions can best align with your interest and goals and solve those problems. Then set out to research and understand all you can about those organizations.
- Are Your Selected Institutions Spending Wisely? A big tip-off is whether a charity is spending a significant amount of money on administrative and marketing expenses. Take a good look at the charity’s finances. Financially healthy organizations are ones that are both financially efficient and sustainable. They have greater flexibility and freedom to achieve their mission. Make certain the nonprofit is accountable and transparent.
- Is the Nonprofit Effective? Find out whether their work and progress are making a difference. What evidence of this do they provide? Read their annual reports thoroughly and ask questions or look to the success of their graduates or beneficiaries.
- Does the Organization Have Good Leadership? Solid nonprofits will typically have respected and competent leaders—perhaps even more so than in the private sector. Look for a charity that has a dynamic, proven leader at the top. The organizations with high turnover typically struggle. This creates other problems. The inability to retain quality leadership is frequently a signal of instability and a lack of organization.
- Do Your Donations Work With Your Estate Plan? Remember that you have the flexibility to give some money now, but perhaps you’ll be able to give more later through your estate plan.
If this last question leads you to think, “But I don’t have an estate plan,” then your first step in donation and charitable giving is to meet with our firm’s estate planning attorneys. During the process of creating the plan, we will be able to explain how charitable giving might work for you and your family, from both a philanthropic and strategic tax perspective. There are innovative ways to donate, such as using your IRA distributions or donating highly appreciated stocks with huge capital gain tax exposure.
Reference: Forbes (December 7, 2018) “5 Giving Tips for Smart Donations”