Along with other year-end financial to-dos, if you’re like most people, you’ll close out the year with a flurry of charitable giving.
According to one study, 36 percent of annual giving occurs in October, November and December, with December carrying the bulk at 20 percent.1 Realizing this fact, many organizations tend to solicit gifts during these months. In many cases, this is reactive giving, often done quickly without deliberate thought.
Making contributions at the end of the year is beneficial for the charities you support, but it may have less meaning for you. By rushing to beat a December 31st deadline with your gifts, you may feel as if you’re “checking a box” to make donations, with the tax-deduction deadline in mind. That’s not always the most satisfying way to give.
While your generosity is always appreciated, the reality for most organizations is that their budget demands continue all year long and cash flow is important for them to better plan their budgets and meet their goals. This is one reason you should consider adjusting the timing of your gifts to a year-round strategy.
However, year-round giving doesn’t only benefit charitable organizations. It also contributes to your own philanthropic purpose. By spreading out your contributions throughout the year, considerations about which causes to support are likely to be more thoughtful, and in that way, ultimately more meaningful.
It’s possible that because you’ll take more time to plan your giving that the donations you make in January or May or September will leave you with a greater sense of fulfillment. The tax deduction (if you qualify to claim it) is just as valid, but in many ways, your money may provide a greater benefit because you’re supporting organizations through periods when they face a cash flow crunch. It demonstrates your commitment to causes in which you truly believe and that you recognize the important role they play day-after-day. Your contact through the year may also help you feel more connected to your community and its needs.
Not rushing to make last minute donations before year-end also allows you to put more thought into the process. That gives you the opportunity to more fully incorporate your own values into your giving decisions.
This more deliberate approach can be categorized in different ways:
There are a variety of practical ways you can incorporate giving into your financial plan:
Build it into you budget
Make giving a regular part of your budget, just as you do your mortgage, retirement savings and household expenses. Even if you set up a specific account to hold monies you’re setting aside for charitable donations, you can use that money quarterly or monthly to fund the causes that matter to you.
You can establish yourself as a “sustainable” contributor, providing regular contributions through automatic payments. Most nonprofits make it easy to do this through their websites or social media pages. In this way, giving is built into your budget without having to expend extra effort to write and mail checks. It also benefits the organization by providing a regular source of cash flow throughout the year.
Capitalize on matching grants
If your employer offers a program that matches contributions to qualified organizations, be sure to take advantage of it. All too often, this money represents a significant potential charitable gift that is left on the table. Check to see what your employer offers and try to capitalize on 100 percent of the match that’s available to you.
Establish a donor-advised fund
You can make large contributions to a donor-advised fund, offered by various money management firms. Typically, your contributions are tax-deductible, and the assets invested can grow on a tax-deferred basis until they’re distributed. You can have funds directed from a donor-advised fund to selected charities on a regular basis. This may be a good option if you’re looking to maximize tax deductions in a given year and have a large cash reserve or other assets set aside that could be used for charitable purposes.
Any of these steps will be a good starting point, depending your circumstances. As the New Year approaches, consider entering it with a strategy for year-round giving to the charities that matter most to you.
Want to make sure your giving is doing the most good? Read 4 steps to finding a charity to support.