Have you ever felt your charitable donations could be more impactful?
Some people worry their charity isn’t making the difference they intended. Strategic philanthropy can make the world a better place and also benefit your financial health. Here’s how to ensure your charitable giving has the strongest effect:
Align Giving with Family Values
To maximize the impact of your charitable donations, start by aligning your giving with your core values. I speak with many couples who want to leave a philanthropic legacy but struggle to get both spouses on the same page. By engaging in meaningful conversations about values, you can foster a shared vision.
The Financial Benefits of Charitable Donations
Charitable giving isn’t just about making the world a better place, it can also benefit your bottom line. For instance, donating funds directly from your Individual Retirement Account (IRA) as your required minimum distributions (RMDs) can reduce taxable income (for those who’ve reached 73). This tax-efficient strategy allows you to support causes close to your heart while lowering your tax bill.
Consider focusing on local organizations where your involvement can make a larger impact. By choosing smaller charities, you can make sure your funds are used effectively. While many people choose to give 10% of their income to charity, I see many families (both high-net and otherwise) who choose to give 20%. In my inspiring conversations with these charitable leaders, I have never heard people express regrets about their increased giving.
Donating appreciated stocks is another way to increase your impact while lowering your tax obligations. Click here to receive a comprehensive overview of this strategy and how you can implement it into your financial strategy.
Creating a Philanthropic Legacy
Building a philanthropic legacy involves more than just financial contributions. It’s about instilling values of generosity and responsibility. Don’t be shy about discussing your charity with your family.
Here are practical steps to get started:
- Engage in Conversations: Make sure the charities you support align with your family’s values.
- Involve Professionals: Consult with accountants and lawyers to optimize your donations and minimize taxes.
- Choose Carefully: Your donation may have a larger impact on smaller, local charities.
Charitable giving can be extremely rewarding. If giving impactfully is a cause that is close to your heart and you need help determining how to do it effectively from the U.S., contact us at (02) 624-2788 or sign up for a free Cross-Border Financial Evaluation by clicking here.
Douglas Goldstein, CFP® is the director of Profile Investment Services, Ltd. www.Profile-Financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation on how to set up your American assets to meet your financial goals. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.
Published January 8, 2025.