As you brace for the holiday season — a crisp chill in the air, the jingling of bells — you may also have a steady stream of donation requests from charitable organizations arriving in the mail. As an American, you will probably be in a giving mood as the United States is one of the most charitable nations, giving away an estimated $499.33 billion to U.S. charities in 2022.1
The non-profit organizations that we donate to in order to support our favorite causes are dependent on those charitable contributions. While the contributions we make are for the greater good, many savvy investors understand that charitable contribution is also an investment.
Why Donate?
Reasons for donating are as varied as the contributors themselves. Besides furthering the goals of a cause close to one’s heart, charitable giving can soften one’s personal brand, be a touching tribute or legacy for a loved one, or create numerous tax advantages for investors.
A charitable tax write-off sows guaranteed returns, and a lifetime of charitable giving can help with estate planning. There are several ways that a charitable contribution is an investment in one’s portfolio. For example, opening a charitable remainder trust (CRT) may help an investor turn non-income-generating assets and properties into profitable ones. Charitable investments may also fund life insurance, a way to better provide for heirs. Additionally, private foundations offer reduced estate and income taxes; a charitable bequest may reduce gift taxes, and donor-advised funds allow assets to grow tax-free.
How to Donate — Screening Chosen Charities
It’s the season for giving, but beware. There is never a shortage of scandals involving charitable foundations misusing funds or turning out to be outright scams. As an investor, you want to make sure your dollar is stretched as far as possible, which means fully screening whom you choose to invest in. Luckily, there are more options now than ever for screening the charities of your choice.
Two online resources to check the validity of charities you are considering donating to include charitynavigator.org and give.org. These websites document legitimate charities, including governance and cost-effectiveness to help you avoid donating to a scam.
When to Donate
For tax savings, there is not necessarily a best time to give throughout the year. However, the urge to give is typically strongest around the holidays. As the holiday season coincides with year-end, this time of year is often best for investors looking to limit their tax burden.
It is important that you have a charitable-giving plan. Researching the charities that serve the causes close to your heart and working with your financial professional to develop a plan around your giving will help you maximize the benefit of your donation, both for the organization of choice and for your personal investment.
For a better understanding of how charitable giving can both help your investments and minimize your tax obligations, book a conversation with the Emerj360 team.
Source
1 – https://www.philanthropyroundtable.org/charitable-giving-trends-in-2022-a-challenging-year-for-philanthropy/
