Charitable Giving & Financial Planning: How To Align Philanthropy with Your Financial Future

By Hightower Great Lakes on April 20, 2018

There is no lack of studies and statistics that prove that charitable giving offers greater happiness when compared to simply buying more “stuff.” Eventually, the newness of that fancy car wears off, the enjoyment you get from that expensive boat fades, and you realize that everything you fill your home with maybe isn’t as important as you originally thought. However, giving to a cause or a charity you believe in delivers something different to you—something more profound, deep, and worthy. Charitable giving forges feelings of connectedness and community that don’t fade away.
Incorporating charitable giving into your financial plan is a fantastic way to ensure that your generosity is aligned with the beliefs and causes that are most important to you. Some forethought about these key issues will also help you guarantee that your good intentions don’t jeopardize other tenets of your long-term planning.

1. Identify Your Purpose

The most effective charitable giving is thoughtful and intentional. It may be helpful for you and your spouse to ask yourselves some questions in an effort to narrow your focus and identify your purpose. Consider the following:

• Do we want to support a national or local cause?
• Are there pressing issues in our community where we believe we can be impactful?
• Do we have any personal connections to causes, such as medical research or support for the arts?
• Is it important to support friends or family through contributions to causes that influence their lives or fulfill their passions?
• Are we looking to support a religious organization, such as our church?
• Do we believe that our charitable impulses are motivated by on-going problems, such as education or homelessness, or would we rather position ourselves to react to events such as natural disasters?

2. Do Your Due Diligence: Research, Research, Research

Once you’ve settled on a cause, it’s time to do some research on potential recipients. Visit the local nonprofit you’d like to support and meet with its leadership team. Is the organization running itself responsibly? Are there good, competent people in charge? Do you feel confident that these people will get the job done? Make sure you have answers that you feel comfortable with to these questions.  The last thing you want is to sink your money into a well-intentioned black hole.
If you’re looking to give to a national organization, keep in mind that even some of the biggest names have come under fire in recent times from watchdog groups for misusing donations. Ensure you’re giving to an organization that’s doing what it says it’s going to do with your money.
Additionally, keep in mind that large organizations—even non-profits—have to manage expenses related to overhead, staff salaries, and insurance. Therefore, you must figure out if you are happy supporting the organization’s operations—and not necessarily the cause they pursue. If the answer is no, and you want to see your money more visibly in action, you might find yourself happier by giving on a local level.

3. Be Wary of the Internet

It’s obvious that whenever something bad happens in the world, our email inboxes and social media feeds are flooded with donation links and appeals for help. However, I encourage you to read before you click. Be especially wary of crowdfunded campaigns on sites like GoFundMe. While the cause may sound worthy, these sites do not provide meaningful oversight on every campaign, nor are they required to. Your money could be going to a cause, or it could be going straight into a scam artist’s pocket. You’ll never know for sure unless you know the person organizing the campaign.

4. Figure Out How to Do the Most Good

Not all charitable giving has to entail writing a check. There’s more than one way to give. For instance, maybe the local adult literacy center needs volunteer tutors just as much as it needs funds. Perhaps you’d feel more fulfilled helping out at your church’s food bank than you would by writing a check alone. Taking a more active role in a cause that’s important to you and investing your time and hard work might be the most valuable thing you can give.
However, if you want to help with large-scale problems outside of your own community, like hurricane recovery in another part of the world, know that money is usually the most effective way to contribute. Unlike toiletries or canned goods, money doesn’t have to be boxed and shipped. You’re better off contributing to large, trustworthy organizations that already have systems, infrastructures, and pipelines in place—and know how to get the work done.

5. Recognize Your Limits

This is especially true as you near retirement age—your giving should be a planned part of your budget. Don’t make a large one-time contribution that’s going to force you to dip into an emergency savings fund. Additionally, be careful about signing up for a recurring gift that’s going to put a strain on you as you pay your monthly bills. If you can’t give as much money to a cause as you’d like, think about supplementing a smaller contribution with regular volunteering.
Simply know that sometimes our best intentions get us into the most trouble. It’s great that you and your spouse want to use your money to try to make the world a better place; however, your comfort and happiness are important, too. Even the wealthiest people have to say no sometimes.
Ultimately, when you may feel in doubt, let your core values be your guide. Apply the same principles to your giving as you do to the rest of your life-centered financial plans: Use the money you have to attain and live the best life possible. And know with a little planning, you have the capability to make life better for those around you as well.
Learn more about our life-centered financial planning approach here!
 
Scannell Wealth Management is a group of investment professionals registered with HighTower Securities, LLC, member FINRA and SIPC, and with HighTower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through HighTower Securities, LLC; advisory services are offered through HighTower Advisors, LLC.