HomeFinancial PlanningWhat's Your Family Approach to Charitable Giving? Year-End Ideas & Insights

What’s Your Family Approach to Charitable Giving? Year-End Ideas & Insights


As the holiday season approaches, many of us are not only gearing up for festive celebrations but also considering ways to give back to our communities. Charitable giving is a big part of many family financial plans, and when done effectively, it can alsoallow you to make strategic tax moves at the end of the year. In this blog post, we’ll explorehow to decide how much (and when) you should donate, how to incorporate kids into giving, and more.

Financial Benefits: Deciding How to Donate

It’s important to do a bit of financial planning before making decisions about charitable giving. There are a few key questions to consider:

  1. How much will I donate?
  2. When should I donate?
  3. What type of contribution do I want to make?

How Much Will I Donate?

One way to iron out the “number” that’s right for you and your family is to look back on last year’s tax filing. Take a closer look at past deductions to identify patterns and areas for improvement. For instance, you may realize that donating slightly more this year can move you down a tax bracket. You can also look at your charitable giving plan as more of a “big picture” financial goal by deciding on a loose percentage of income you want to donate, or automating contributions from each paycheck to stay consistent.

Some companies offer a contribution match, making your donations have an even bigger impact. You might want to base how much you donate on how much of a match your employer offers.

When Should I Donate?

A key decision for charitable giving is whether to make recurring contributions or an annual lump sum. Charities are especially appreciative of recurring giving. It allows them to plan and build a better budget for their expenses. It also allows you to even out your giving throughout the year and work it into your monthly budget.

On the other hand, making an annual donation might provide flexibility and the opportunity to assess your financial situation before making a larger contribution. If you have a large bonus or commission check that comes a certain time of year, you may decide to use this for your annual giving.

What Type of Contribution Do I Want To Make?

Many people opt to give cash by writing checks directly to the charities of their choice, others give by credit card, which makes it easy to track giving throughout the year, however, the charity usually pays 3-4% in transaction costs.

Another way to give is by donating appreciated securities or stock directly to your charity of choice, which can be hugely beneficial to 501(c)3 organizations.. This may also help you offset your tax liability if you itemize your taxes. For example, if you bought a stock for $500 and now it’s worth $2,000, and you donate it to charity, you get to deduct $2,000 on your taxes, but it only cost you $500, and the charity doesn’t have to pay taxes on the gain and neither do you.

Alternatively, you might look at donating real estate or valuables if that’s relevant to your unique situation. Many people choose to donate old cars rather than sell them because it might mean a nice tax write off, based on their tax bracket.If you’re retired, you can even look to make Qualified Charitable Distributions (QCDs) in lieu of traditional Required Minimum Distributions (RMDs) – another tax “win” for you, all while using your wealth in a way that aligns with your values.

Getting Creative With Your Charitable Giving

You don’t have to stick to just writing a check to your preferred organization. In fact, many people opt to open up a Donor Advised Fund (DAF) for their giving strategy. A donor-advised fund (DAF) is like a charitable investment account.

As the donor, you contribute to the fund (with cash or donating appreciated securities), and you can then make grants to your favorite charities over time. It’s a way to simplify the process of giving to multiple charities and can also offer some tax benefits. It’s like putting money aside for your charitable endeavors and strategically distributing it.

When you donate you get the immediate tax benefits, but can invest  your donations until you’re ready to grant them to a charity you love. Being able to invest the money in the account means that you could grow your money for future gifting which may have an even greater impact!

Making a Game Plan for Your Family

Your next step is to make a charitable giving game plan that works for you and your family. This might be a big picture giving goal or more specific goals about how you want to support causes you’re passionate about. A few giving-focused goals might be:

  1. Financial. My family sets a financial goal each year to dedicate 5% of our Adjusted Gross Income (AGI) to charitable causes we want to support. Other families have a set dollar amount they try to give each year.With a broad goal like that, we’re each given flexibility in how and where we want to donate and make more significant donations together as a family. This can look different from family to family! It’s truly whatever is best for you and feels suitable for your budget.
  2. Time. If you and your family support specific causes or organizations locally, you can bring your kids into the conversation by going beyond financial donations. Families that volunteer together often find the experience very rewarding for parents and kids! So many organizations offer kid-friendly volunteer opportunities.You could take your kids to a local soup kitchen or food pantry, walk dogs at the humane society, or even sign up to deliver dinner for a program like Meals on Wheels.
  3. Energy or skills. This idea is especially relevant for parents with kids who are a bit older. One way you can incorporate giving into their value set early is by helping them find ways to use their unique talents to support local organizations.

I’ve known people who helped their teenagers knit or sew blankets for the NICU at a hospital near them or make holiday cards for people in dementia care facilities. This is a great way to show your kids that there are many different ways they can give back to their community and that their time and talents are just as valuable as writing a check.

Final Thoughts

As you embrace the spirit of giving this holiday season, consider integrating charitable giving into your financial planning. By conducting a last-minute tax projection, engaging in family conversations about giving, exploring past deductions, and weighing the benefits of different ways you can give back – you’re setting yourself and the charities you love up for success both now and in the future.

Have questions about charitable giving? We’re here to help!Reach out to us today by clicking here.

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