5 Ways to Maximize Your Charitable Giving

‘Tis the season for giving, and we have 5 ideas to help you maximize your charitable donations! These tips are quick and easy to implement, but can have a tremendous impact on your community. Also, if you itemize on your taxes be sure to track your charitable giving as those gifts may be tax deductible.

1. Sign Up For Ongoing Gifts

By signing up for an ongoing giving program you help provide some predictability for your favorite charities. When charities and organizations are able to have a better sense of what their cash flow will look like over the year, they can make better plans. They might be able to take on that big project if they know that people like you are committing to giving a certain amount of money each month.

Let’s be honest, how many of us would whip out our checkbooks and write a check for $1,000 to a charity right now? I might feel a little anxious about doing that. But, what if I asked you to find $83 a month in your budget to give to a charity? That sounds doable, doesn’t it?

That monthly gift of $83 equates to $996 over the course of a year. Those “small” gifts can add up to a big impact!

2. Take Advantage Of A Company Match

This is such an easy way to increase your impact you definitely don’t want to miss it. Many major employers in the Richmond area will match employee charitable donations. Reach out to your company’s foundation or HR department to find out how to take advantage of this unique employee benefit. Generally there is an annual contribution limit per employee. Your employer will probably require a receipt from the charity and not all charities qualify for the match. Be sure to take those rules into consideration as your make your charitable gifts if you want to take advantage of this great employee benefit.

3. Be True To Yourself

People underestimate the power of being true to themselves. If you feel your emotions rise when you hear stories about the devastation in storm-ravaged areas or stories of refugees’ struggles, then take that moment and make a donation. Do you feel passionately about ending food deserts, supporting the local library or pet shelter? Donate to them, and consider volunteering a few hours with your favorite organization as well. It can be a powerful combination for your own mental health and your community.

4. Give Creatively

While clearly the tax benefits of charitable giving are not the most important factor, there are some techniques you can use to boost the tax-efficiency of your charitable gifts. One powerful technique is to gift appreciated securities (stocks, ETFs, mutual funds, etc. that are worth more today than when you bought them) directly to the charity instead of cash.

Many charities are able to accept direct, in-kind transfers from your taxable investment account. Which means, if you hold XYZ stock in your account and you want to donate it to a charity you can. There’s no need to sell it first - if you do sell it first, you lose the benefit.

If you have a security that has increased in value, instead of paying the capital gains tax when you sell the security, you can give it directly to the charity. Then you can replace that asset with cash in your portfolio. This can be particularly helpful for people who own a large holding or who have large gains in a particular stock or mutual fund. You can potentially reduce your taxes as you rebalance your investments while supporting a cause you care about. Win-win-win!

You may not be surprised to learn that the IRS has an opinion on how you go about gifting appreciated stocks or mutual funds. In order to deduct the fair market value of the security from your adjusted gross income, you must have held the asset for at least one year. If you have owned the asset for less than a year then you will only be able to deduct your cost basis. Your cost basis is what you paid for the security.

While this strategy is not hard to implement, it can take a little bit of time. So don’t wait until the last minute to make this request to your custodian (the company who holds your investment accounts - Vanguard, TD Ameritrade, Fidelity, etc.). Also, be sure to check with your tax advisor to see if this strategy makes sense for your particular situation.

5. Give Wisely

Don’t forget to make sure that the charities you are giving to are spending their money (aka your money) wisely. Check out resources such as Charity Navigator and Guidestar to see what percentage of funds are being spent on overhead or fundraising. It should be said that these websites do not necessarily measure the impact or effectiveness of an organization. The reality is that it can be hard to measure the effectiveness of an organization.

If you want to dig deeper on the effectiveness of a charity there are some questions you can ask. Such as, do you measure the outcomes for your program participants? Do you set specific goals and track progress towards those goals? Do you survey your program participants to see how the program has affected their lives and what could be improved?

Charitable giving is a deeply personal expression of our values but it’s easy to feel overwhelmed by the need we witness around us. By giving consistently and creatively you can have an even greater impact on your community and world.  


Want to know more about "securities" and other investment advisor fancy-talk? Read What is an Asset (and how can I get one) to build up your investing confidence!

Is your advisor a fiduciary or just a salesman? Find out how to tell and why it matters in Is My Advisor a Fiduciary?

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