Give with heart, but be smart, on Giving Tuesday
After the retail frenzy that is Black Friday and Cyber Monday, you may have a bit of a retail hangover. The cure for that slightly sick feeling could be the great feeling you get from helping others, and that's what Giving Tuesday is all about. Claire Costello, national philanthropic practice executive with U.S. Trust, answers key questions about the event, held the Tuesday after Thanksgiving.
Q: What is Giving Tuesday?
A: Giving Tuesday is a globally celebrated day of giving back. The holiday has gained massive influence thanks to the power of social media, with #GivingTuesday serving as a call-to-action for people around the world to donate money, time and talent to the causes they care most about. The day is also intended to signify the kickoff to the charitable giving season surrounding the holidays and annual year-end giving — though, for many, giving starts even earlier or is a year-round activity.
Charity choices and precautions: Find the right one for you
Q: How do you decide which organizations or causes to support?
A: A recent study from U.S. Trust revealed that affluent donors’ greatest challenge when it comes to charitable giving is identifying what causes they care about and deciding where to donate. A good place to start is asking yourself some key questions: What are your values? What are you passionate about? What issues of the day matter most to you? What is your ultimate vision of the impact you wish to make? Is your goal to advance a global cause, to engage with issues in your local community, or perhaps both? Your answers will help inform the issues that you choose to address. From there you can begin to develop specific goals aimed at achieving your vision and to establish the criteria for the type of organizations to partner with — whether large or small, blue chip or fledgling, community-based or nationally focused, to name a few.
Q: How do you vet an organization?
A: As is true with any investment, it is important to do your due diligence before giving to a non-profit. This includes identifying what your preferences and criteria are with respect to the organization mission, type, profile, financial situation and leadership. Information about an organization can be gathered from a number of sources, including personal references from others who have worked with the non-profit, information from the organization itself (e.g., websites, annual reports, etc.), public reports in the media and third-party sites such as GuideStar, Charity Navigator and the Better Business Bureau’s Wise Giving site. Perhaps the most effective way to evaluate an organization is through your own personal engagement, be it through volunteering or a site visit at the non-profit.
Q: How much should you give?
A: Giving is a highly personal and idiosyncratic process. As such, there is no right answer when it comes to gift amounts. Having an annual giving budget and strategy in place is a best practice that can help to determine the amount of your contributions. The needs of the organizations that you are supporting are obviously important to consider as is whether there is a specific purpose of your contribution or whether it is being given as general operating support. It is also important to bear in mind that monetary gifts are but one way to support an organization. Giving of your time, talents and skills, making introductions or hosting events for the organization are some other ways to provide valuable support.
Q: What is the best way to give (cash, checks, credit cards, time)?
A: Giving with cash or check continues to be the most popular means by which to make a charitable contribution. Credit cards, meanwhile, can have the added bonus of incentive programs such as those that give rewards points for charitable donations; however, due to interchange fees, the charity receives slightly less than 100% of what you give. Gifting of IRAs and illiquid assets — real estate, securities, art collections etc. — can often benefit the recipient organization while also achieving wealth structuring goals of the donor. Depending on your giving goals, you could also choose to structure your giving in a giving vehicle, such as a donor-advised fund, charitable trust or private foundation. Regardless of the method you choose, it’s important to understand the benefits and regulatory requirements of each giving method so you can determine what fits best with your style and overarching financial plan.
Retirees who help charities are happier, but don't give until it hurts
Giving as a family provides a powerful opportunity to engage with one another, and can provide an experience often unrivaled by other family activities — be it vacationing together or running a family business. Engaging the next generation in giving helps to pass important values, inform your family culture, promote a deeper understanding of each other and of social issues, foster a sense of caring and responsibility and provide an opportunity to acquire financial acumen. According to a Merrill Lynch giving study last year, creating family giving traditions around the holidays is a highly effective way to teach generosity to the next generation.
Q: What kind of records should you keep?
A: According to the U.S. Trust study, wealthy donors gave to eight different non-profit organizations last year on average. Keeping your charitable giving records organized will make life easier during tax season. You should be carefully tracking each gift you make throughout the year, and obtain and file a receipt or written acknowledgement of your gift from the organization. Depending on the frequency of your gifts, it can be helpful to transfer records to an online financial planning program to stay organized and get a big-picture view of all of your gifts and tax deductions you may be eligible for. If you have structured your giving in a giving vehicle such as a donor-advised fund, the fund sponsor typically provides regular reporting reflecting your giving activity. If you give through a family foundation, you are required to file an annual tax return which requires that you retain underlying documentation.
On a more substantive level, it is important to monitor and evaluate the impact of your giving. If there were milestones built into your grant agreement, those should be retained and reviewed at appropriate junctures along the grant period. Communication from the non-profit organization about impact achieved as well as information from public sources addressing progress can also be helpful in assessing whether your giving is having its intended effect. This type of analysis enables you to learn from your giving and inform future giving decisions.