Charitable giving: use financial planning to max your impact

Helping Ukraine is the primary focus of many right now, and you may be rushing to direct your charitable giving to the country and its people. You may also want to aid businesses, schools, and organizations trying to recover from COVID-19.  Maybe supporting weather-devastated areas razed from fires, earthquakes, and hurricanes is a top priority for you. Add in cause-driven and political contributions along with tithing to religious institutions, and you’ll find no shortage of charitable giving opportunities.  You may want to give even more than you do.  Can you?

How much money can we donate?

Many people are charitably-minded and value contributing money to make a positive social impact. While altruism may be a key value, few understand just how much of their wealth they can direct to charitable giving and still maintain a secure financial future.  Sometimes wealthy people participate modestly in charitable giving and feel guilty that they don’t donate more. They hold back as they feel slightly to extremely nervous when they give, worried that they might put themselves at financial risk.  This might not be rational, depending on their wealth, but they don’t know how much is stretching too far.

Connecting your money to your life

Imagine feeling 100% confident in the amount you can give comfortably while still fulfilling your other life goals. A clear financial plan gives you the insight into your complete wealth picture and opens up the possibility to change your charitable giving with confidence.

If you’ve never worked with an advisor before, the financial planning process may feel mysterious. You’ll start first by defining your life goals, from the wildest aspirations to your more practical ambitions.  Describe what life looks like now, and envision what you want it to become.  Then, with the help of your advisor, you’ll see how your existing wealth lines up to serve you and where you have funding gaps. This context helps you understand what it may take for you to achieve both your short- and long-term goals.

As you look to create a plan for your who next stage of life, your discussion may include topics such as:

• exiting a business,
• making a career change,
• charitable giving desires,
• shifting more time to family, and/or
• building more adventure and travel into life.

It may also include how to help aging parents or support children as they become adults.  Once you articulate your goals and desired timeline, now you can match your money to your life.

Financial planning for charitable giving

By aligning your current net worth with your aspirational plan, you can see what investment(s) you need to make to achieve your desired outcomes. You will gain clarity on how much money you can direct to charitable giving each year, as well as what it will take to fund larger charitable goals (for instance, you may be able to take advantage of tax-saving benefits of a Donor Advised Fund or other planned giving opportunities).  Viewing these contributions alongside funding for other goals (such as financial independence, extended time off, paying for a wedding, getting an advanced degree, etc.) will give you the perspective you need to give to your limit.

Career pivot to volunteer or serve

While most charities need more funds rather than more volunteers, you may want to dedicate more of your time to serve your community.  If you are more ambitious in how you want to make an impact, you may pivot out of your career completely or use your professional skills in altruistic way. For others, a career break or alternative work schedule may be the right answer to free up time to contribute.

Whether you want to start a foundation, volunteer at schools or for non-profits, or serve your religious group, you can work through options to make these kinds of life changes. With the combination of comprehensive financial plan and guidance from a fiduciary financial advisor, you can feel confident in the path you take to serve your charitable giving desires.