Charitable contributions to one or more nonprofits and charitable organizations can be a great way to lend support to the causes you care about. Charitable contributions also aid in tax deductions, which is why many individuals and families with significant assets often donate to qualified public charities.
But before you develop a charitable giving plan, there are questions you should ask yourself to ensure your goals are achieved. Additionally, there are questions you’ll want to ask the charitable organizations so that you can be sure your donations are properly aligned with the charities’ missions and programs.
Questions to Ask Yourself When Creating Your Charitable Giving Plan
Before making a charitable contribution, ask yourself, “What are you trying to accomplish? Obviously, different charities and nonprofits have different purposes and missions. What is it that you believe in? Do you want to support a specific charity whose mission aligns with your own belief system, or are you simply attempting to deduct a portion of your adjusted gross income?
Perhaps you also want to invest in the needs of your community. Whatever your plans, knowing first what you want to achieve will help you make a more informed decision as to where to donate your money. It might also help to talk with a financial advisor before making a charitable contribution. Consider this free guide on how to find a financial advisor that works for you.
What Type of Fund Will Help You Achieve Your Goals?
Once you have a clear picture of what you are trying to achieve with a charitable contribution, the next question to ask is what fund type will serve you best. For example, if you want to make a charitable contribution and also stay involved in the mission of the charity, you can offer a donor-advised fund. This enables you to lend your support to a charity or nonprofit in a manner that allows you to see firsthand how your donation is serving the mission of the charity.
A designated fund is another type of charitable contribution that ensures one or more charities still receive monetary support even after your passing. Setting up a designated fund can be part of your estate planning and is often done with the aid of a financial advisor. You can learn more about choosing a financial advisor with this free analysis.
To support your local community, you can simply offer unrestricted gifts. In this way, you can invest in your community and help local nonprofits and charities address the changing needs of the community.
A field of interest fund is another type of contribution that provides your chosen charities with an annual grant. You can also choose to support a specific purpose with these funds rather than just one specific charity.
How Will You Support Your Charitable Contributions?
Charitable contributions can be made in several ways aside from simply offering a check or cash. Non-cash assets can be a great way to support many charities as well. This includes assets such as stock options, real estate and land, virtual currency, and even equipment or machinery. Making the right choice can possibly benefit your chosen charities even more than a cash contribution.
Questions to Ask Charities and Nonprofits
Before choosing a charity (or charities) to donate to, consider asking the following questions to ensure your charitable contributions are put to good use and help you achieve your goals.
What is the mission of the charity, and in what ways have they been successful?
Sometimes there may be several charities to choose from that all support the same cause. But some may have implemented their plans and programs better than others and so are more successful in completing their mission. Learn more about the charity’s accomplishments and strategies.
What Are the Greatest Needs of the Charity?
Knowing exactly what your charity needs can help you better make a charitable contribution that will offer the most value.
How Is the Charity Managed?
Most charities and nonprofits often begin with very good intentions, but mismanagement can derail the mission over time. Asking for details on who manages the charity and how it is managed can give you great insight into how responsible the charity is and whether it can be trusted to put your charitable contribution to good use.
Charity Navigator is a great resource to compare causes and the impacts your donation could have before you donate.
Take the Next Step
Contact a financial advisor to aid you in your decisions and help you better accomplish your goals with charitable contributions. An advisor can help you find worthy charities and answer any questions you might have about the types of funds to choose from so that you can develop a charitable giving plan that works.
Plancorp specializes in wealth and asset management. We are evidence-based investors and focus on ensuring our client's investments support their life goals as one piece of their overall financial plan. Other service offerings include estate planning, tax strategies, philanthropic guidance, insurance, equity compensation and more. Contact Plancorp today to get started.
