How to get the most out of charitable giving

On Behalf of | Dec 31, 2020 | Estate Planning

Individuals and families who give to charity want to support a worthy cause as well as maximize the use of their money. Donors also experience a number of intangible benefits related to the act of giving.

It pays for donors to find out ways to get the most out of a charitable giving plan.

The surprising benefits of charitable giving

Forbes divides the benefits of giving to charities into external and internal rewards. The external considerations include supporting a cause that a person cares about deeply. In fact, many not-for-profit organizations work on important problems such as protecting the planet and and helping people overcome hunger. A donation to such a cause increases the effectiveness of an organization.

Internal benefits focus on how a donation makes a person feel. Research shows that giving makes the donor feel happier. Giving also makes a person feel wealthier. Some studies suggest that those who give experience better health.

The advantages of a smart strategy

CNBC lists several smart moves individuals can take to maximize the impact of donations and to make the most of charitable giving. These strategies have a place in many charitable giving plans:

  • Give to charities that use donations efficiently
  • Pay attention to tax laws and deductions
  • Donate stock instead of cash
  • Use required minimum distributions from an IRA

With the new tax laws for charitable giving that went into effect in 2018, specifically the higher standard deduction, it could make sense to bundle donations from several years into one year. This might make it worthwhile to bypass the standard deduction and itemize taxes. This strategy enables a person to reduce taxes as a result of charitable donations.