With a little planning and dedication, anyone can be a philanthropist. Elisabeth Williams shows you how.
Ready to make some decisions about what, when, and how to give? I’ve broken down the intimidating process of building a strategic giving plan into five simple steps to prove anyone can be a philanthropist:
✓ Decide what organizations to support.
I recommend narrowing your focus to 1-3 organizations addressing the causes you are most passionate about. This way, you can consolidate your giving and have a greater impact. Remember, nonprofits incur a fee every time they process a donation.
✓ Decide when to give.
You’ll also need to decide when to give, particularly if you have a substantial amount of wealth to share. Here are three guiding questions:
- How much would you like to donate monthly? What about annually?
- Do you want to give your wealth away while you’re alive to maintain maximum control?
- Would you prefer to set up a foundation to carry on your legacy once you’re gone?
✓ Decide how to give.
Donations can be made in a variety of ways, including by:
- Cash, check, credit card
- Giving appreciated assets such as stocks, bonds, mutual funds
- Naming the nonprofit as a beneficiary of a life insurance policy or retirement plan
- Setting up a bequest payable upon your death
A critical way to help an organization you trust is to provide funding that lets them carry out their mission effectively today and plan for the future. You are making an investment to address a social ill, so consider a recurring, monthly, or multi-year donation to support the following:
- Unrestricted/general operating funds—to give the nonprofit the freedom to budget appropriately and decide how best to use the funds
- Infrastructure/performance measurement investments—to support the nonprofit’s growth and measure their impact
- Capital funding—to scale the nonprofit’s operations
Aside from giving directly to an organization, there are a variety of giving vehicles that you may want to explore with your financial advisor, accountant, and/or attorney to make the best decisions for your personal situation:
- Donor Advised Fund—allows you to set aside charitable funds whenever you choose and take the tax break immediately. You don’t have to decide where to donate the funds until you’re ready. The giving account is housed with a sponsoring public charity such as a community foundation, a university, or a financial institution. With a DAF, the donor makes an irrevocable charitable contribution to the sponsoring organization and loses all legal control over those funds.
- Foundation—an independent legal entity established for charitable purposes, which is governed by one or more individuals, a family, or a company. A private foundation gives donors complete control over granting and investment decisions.
- Charitable Remainder Trust—a tax-exempt, irrevocable trust that first distributes income to the beneficiary of the trust (who you name) for a specified period of time, then donates the remainder to one or more charitable organizations. A CRT provides the beneficiary with cash flow while obtaining a current-year personal income tax deduction.
- Charitable Lead Trust—a tax-exempt irrevocable trust that first disburses income to one or more charitable organizations for a specified term, then transfers the remainder to an individual beneficiary (who you name). It is designed to result in tax-free gifts to the donor’s family.
✓ Embrace the mindset of a philanthropist.
What if you don’t have a lot to give, don’t use a financial advisor, and have never heard of a DAF or CLT? You’re just hoping to have enough to get your kids through college and retire before you turn 80. But you have a heart for giving and are passionate about your cause. Can you still be a philanthropist?
Heck, yes! Philanthropy is not reserved for the wealthy elite. Anyone can be a philanthropist. It doesn’t matter who you are, what you make, or how much you have in savings. Everyone has something to give.
You have something to give. Sometimes we hear about people donating millions and even billions to philanthropy, and we think our small donation means nothing. Does my $25, $100, $1,000, or even $10,000 make a difference? You bet it does! The nonprofit community needs the support of donors at all giving levels. Never think what you give is not enough. It’s not about how much you give—it’s about why and how you give.
✓ Don’t discount your time and talent.
If you don’t have a lot to give monetarily, you can give your time and talent. Don’t discount the value you bring by sharing yourself.
A great way to get to know an organization is to volunteer. Locate a nonprofit in your area so it’s convenient for you to make a commitment. Then, ask how you can help. Once you’ve identified an organization that you believe is effectively addressing a cause you are passionate about, you may decide you want to become more involved.
High engagement philanthropists realize that social change requires participation beyond donating money. This may include serving on a board, assisting with fundraising, networking, advocacy, or other purposeful ways of sharing your gifts and talents to support the organization in their efforts to bring about change.
Get started today. Use GlobalGiving’s calculator to set a monthly giving goal.