How to Give & Receive the Gift of Philanthropy

December 19, 2019

The holidays are an exciting whirlwind. We rush from holiday parties to family visits, all while trying to make sure we’ve found every last gift on our list.

With all of this going on, it’s especially important to slow down and take a moment to reflect on the holiday spirit of giving. Are we taking this time to share what really matters to us? Can we extend the spirit of giving beyond our friends and family? 

Charitable giving can be a great way for us to act on this holiday spirit. Whether you choose to give to a charitable organization from your retirement account or gift a donation on behalf of a loved one, here are a few ways you can give the gift of philanthropy.

Strategic ways to give

There are a number of ways to give back. Which you choose depends on a number of variables, including your budget, age, and tax strategy. Your giving options include:

  • Cash
  • Appreciated stock 
  • Qualified charitable distributions (donating directly from an IRA rather than receiving minimum distributions)
  • Your time (i.e., volunteering)
  • Items (e.g., clothing, emergency supplies) 

While all of these are wonderful and perfectly valid ways of donating, is there one method more impactful than another? Of course, it all depends on your donation goals and tax strategy. 

For example, donating appreciated stock is typically more effective than donating cash. Consider this: If you donate stock that you have held for more than one year, you can donate up to 20 percent more than if you sold the stock and then made a cash donation. The reason for this difference is the federal capital gains tax, which can reach up to 20 percent. 

Everyone has different values and financial goals. As a result, giving methods will vary from person to person. It’s always better to ask if you’re unsure about which method is best for you, so don’t be afraid to reach out to us if you have questions! 

When the holidays roll around, swap physical gifts for donations

Everyone wants to give a gift that will have a positive effect on the recipient. Rather than give something that might be regifted or shoved to the back of a closet, offer to donate to the charity of your friend or loved one’s choice. 

You may already know just the right charity. Perhaps your friend is passionate about microlending programs for women-run businesses, or your colleague has talked to you about an art therapy program for troubled youth. 

If you’re not sure about which organization to donate to, you can consider using platforms like JustGiving or GlobalGiving. These platforms allow you to purchase a gift certificate that the recipient can use on an organization of their choice. 

This also happens to be the type of gift that can give back to you in the form of a tax deduction if the recipient chooses a “qualified” organization. Typically a qualified organization—like a 501(c)(3)—will be clear about their status, and they will give you a receipt for your donation. When in doubt, you can also check if the organization is listed in the IRS’s Tax Exempt Organization Search

Ask that others do the same for you

At first it may feel awkward to ask others to donate money on your behalf in lieu of typical gifts, but consider what you’re asking. You’re not asking for something extravagant — you’re asking that people save the money that they would spend on a physical gift and instead contribute to a cause that’s close to your heart.  

Here’s a way you can make this ask. Write a letter to friends and family that includes:

  • Your personal reasons for asking that they donate to this cause 
  • Specifics about how to donate (make it easy for them!) 
  • Information about how they can claim their tax deduction
  • A huge thank you for their support!

Let’s get the ball rolling!

Whether this is your first time donating or you want to streamline your annual charitable giving, we are here to help you accomplish your philanthropy goals.