Many people feel it’s important to “pay it forward,” especially if they’ve achieved success — turns out, that is often easier said than done.
Practicing regular charitable giving, or strategic giving at the end of the year, can be overwhelming at first. When talking to clients about charitable giving, I always get permutations of the same four questions:
- Are charitable donations tax deductible? Charitable giving is tax deductible, but you need itemized receipts for your donations.
- How should I choose a charity? There are a couple best practices for picking a charity, like looking it up on Charity Navigator. Charities have to disclose their finances, so in most cases their financials are a few clicks away. You’ll want to look for organizations where most of the money goes directly into the “doing” part of their missions.
- What about scams? Giving on GoFundMe is problematic, because all the vetting is very basic. At JHA we do a deeper dive than GoFundMe when vetting charities for our clients. Over the years, we’ve amassed a list of reputable charities from word of mouth and our own experiences.
- How much should I give? A lot of people wait to do charitable giving at the end of the year — after they’ve had their first meeting with their accountant. Accountants are very attentive to charitable giving and can help you find the right amount to give.
High-net worth individuals may be interested in a philanthropic instrument called a Donor-Advised Fund (DAF). A DAF allows donors to make charitable contributions and receive immediate tax benefits. The donor does not have complete control over how the money is spent, but every effort is made to honor their wishes.
Managing the details of charitable donations doesn’t have to be another item on your to-do list — Judith Heft & Associates is here to reassign that task to ourselves! Contact us to learn more.