4 Easy Ways to Add Charity into Your Financial Plan
When it comes to growing—and managing—wealth, women are firmly in the driver’s seat. Women control $14 trillion of personal wealth in the U.S., according to London-based financial services and consulting firm EY. In a 2016 BlackRock Global Investor Pulse Survey, 28% of women said growing wealth was a top financial priority.
But what about giving some of that wealth away? You may feel motivated to do good, especially around the holidays, but creating a plan for charitable giving isn’t always so simple.
If philanthropy is one of your goals, these tips can help you shape a giving strategy that you can feel good about.
1. Identify what matters most
The first step in crafting your plan is deciding which causes are nearest and dearest to your heart. Are you interested in social issues, human rights, issues that affect women and girls, education, environmental conservation, health care, the arts or animal rights?
Think about where you want to focus your giving efforts. Once you’ve narrowed the field, you can begin researching which charities or nonprofits could benefit most from your support.
2. Evaluate your giving style
Aside from thinking about the causes you want to give to, consider how you like to give. Writing a check to a charity or nonprofit or sponsoring someone for a charitable fundraising event are more traditional ways to give, but there are other ways to show your support.
For example, your employer may offer a workplace giving program, with a matching contribution for every dollar you donate. Crowdfunding platforms like Chuffed.org and Causes.com allow you to connect with causes and pool your donations with people who care about the same issues that matter to you.
Next, think about what motivates you to give. Are you moved by your heart or your head when giving to charity? Do you seek advice from others on which causes to support, or do you trust your gut? Are you more likely to give according to plan, or make decisions on the spur of the moment? Answering these questions can help you fine-tune your giving strategy so your donations have the most impact.
3. Set your budget
Knowing where you want your money to go is one part of the equation. Figuring out how much to give is the other.
The ideal amount depends on your financial situation. If you’re in your 30s and married with young children, for example, your household expenses may be higher, leaving you less disposable income to commit to giving. By the time you reach your 50s or 60s, however, your expenses may be lower, putting you in a position to donate more.
Once you’ve decided on a dollar amount, think about how often you want to make those donations. Do you prefer to give larger lump sums once or twice a year, or would you rather spread donations out monthly? Whatever your preference, the key is to set up a comfortable plan.
4. Snag a tax break
Part of managing wealth effectively involves keeping an eye on your tax liability. If charitable giving is on your agenda, you can get something in return by taking advantage of a tax deduction for your donations.
As of 2017, the IRS allows you to deduct donations to qualified charities worth up to 50% of your adjusted gross income (AGI) for the year. Donations to certain private foundations, veteran’s organizations, fraternal societies and cemetery organizations are capped at 30% of your AGI.
If you’re in a high tax bracket because of your income and you’ve made substantial donations to charity, your ability to deduct them could be extremely valuable. Remember, however, that your donation must be made to a qualified charity and you must itemize on Schedule A to claim the deduction. And you’ll need a written record showing which organizations you donated to, the amount and the date.
Creating a plan for giving doesn’t have to be difficult. The key is to figure out what works best for you, and how you can integrate it with your overall financial plan. If you’re having trouble getting started, consider talking with a financial professional to chart out your next steps.
This post was originally published on www.myworthfinance.com.
For educational purposes only. Penn Mutual and its affiliates do not provide tax or legal advice. This information is based upon our understanding of current laws, which is subject to change. Please talk to a financial professional regarding your specific situation.