Strategic Philanthropy: Giving Thanks by Making a Difference
Thanksgiving is a time for families to gather together, share some fellowship and give thanks for their many blessings. It is the perfect kickoff of to the holiday season, a season which frequently leads Americans to be more self-reflective and altruistic.
Interestingly enough, the holiday spirit isn’t just a feeling however, it is a quantifiable phenomenon. According to Charity Navigator 31% of all charitable giving takes place in December1.
With all of this increased charity over the holidays, how can we be sure those gifts are making a difference? The answer is strategic philanthropy and it requires a little planning.
Step 1 – Define Your Passions
The first step in building a strategic philanthropy plan is to document which issues you and your family are passionate about. While you no doubt already support many fine organizations, having a discussion about the types of causes you support with your children is important. Studies show that parents who discuss their charitable giving significantly increase the likelihood that their children will give to charity in the future2. An after dinner chat over a piece of pie can provide the perfect opportunity to start a conversation and make a list. Encourage your kids to add a few of their own suggestions.
Step 2- Select Your Target Organizations
Armed with your list, the next step is to determine which organizations both align with your goals and are having an impact on the issues you listed. Consider both organizations you already support and nonprofits you may not have considered before. Researching a nonprofit has never been easier with online resources like Charity Navigator offering ratings and additional info about mission, services and expenses. Using online tools you should be able to build a list of your family’s top 3-5 organizations.
Step 3- Consider How You’ll Give
While a simple cash donation can be effective, depending on the amount you plan to donate and your goals, you may wish to consider some additional options:
Donating appreciated securities offers a similar tax deduction to cash while simultaneously delivering a reduction in capital gains tax liability for the donor
Donor-advised funds offer many of the advantages of a family foundation at a much lower price point (minimums typically $5,000 -$10,000)
Charitable remainder trusts are a solution for larger gifts that can provide immediate cash-flow benefits to the donor while also minimizing estate taxes and impacting a nonprofit in the future
These represent only a few of many strategies available, each with benefits and drawbacks and all dependent on the financial situation of the donor and the needs of the nonprofit. If you’d like help defining an effective giving plan for you, a consultation with Josh or Doug is a great way to understand your options.
The final step of any plan is perhaps the most important. Following the implementation of your gifting plan be sure to convene another family meeting to share what happened. Remember, altruism is a learned trait so making sure your children know how their ideas ended up being executed is important. You need not be specific about the amounts you give, only which organizations you support and why. The entire exercise can be a gratifying lesson that resonates long after the holiday season ends.
This article was co-written by Douglas J. Weisenberger, CFP®, CLU, ChFC, CLTC & Joshua C. Evenson CFP®, ChFC, CASL, in collaboration with a professional third party.