John J. Diak, CFP®
How to Make Charitable Giving a Family Affair
Charitable organizations are a vital part of our society. They exist to provide direct help to those in need, or to share information or raise awareness about an issue. Giving our time or money to a charitable cause is a selfless gesture, but it has far-reaching benefits not just to the organizations we support but also to ourselves and our families.
Here are some ideas on how you can get the whole family involved with charitable giving, along with what you need to consider before you donate your time or money.
Benefits of Charitable Giving
While many people associate the benefit of charitable giving with an opportunity to reduce their tax burden, there are many other important ways that being charitable impacts our lives.
According to one study, charitable giving actually activates certain neurons in your brain, creating a surge of dopamine and endorphins and having a positive effect on our mood. (1) Other studies have found giving, as well as volunteering, can help with everything from reducing stress to improving overall cognitive function in senior adults.
Many community organizations operate to supplement government programs, and support people in times of crisis or great need. In many cases, they fill the gaps in what’s available for those who need it. By focusing your giving on your local area, you’re actually contributing to the well-being of your neighbors. These contributions of time or money also help ensure the longevity of these programs.
Getting the Family Involved
Charitable giving is an activity that everyone can participate in, regardless of age. In fact, starting children young gives them a foundation for the future. Understanding how to be community-minded, and that others may not have access to basic needs like food or clothing, helps children develop a service-oriented mindset.
The key to getting everyone in the family engaged in charitable giving is finding what everyone is passionate about. Whether it's education, sports, domestic violence, or food insecurity, finding organizations that match these interests is key.
Consider having a family meeting to discuss how everyone would like to make a difference. While younger children may not have the insight or life experience to understand the nuances of charitable giving, they can still understand basic concepts like “some children don’t always get enough to eat or have toys to play with.”
In a case where you have multiple family members wanting to focus on different areas of charitable giving, consider rotating through various organizations so everyone has a chance to lend a helping hand where they feel the greatest interest.
What to Consider When Donating
Obviously, if you’re donating money there are tax implications to be considered. Charitable donations can provide tax deductions, so you need to keep track of what you are giving and where throughout the year.
For those running a business, you may want to consider what you can do in terms of corporate donations. When a privately owned business makes a charitable donation, there can be multiple benefits, such as no tax on the capital gain.
When businesses or private individuals are looking to get involved in charitable giving on a very large scale, it’s not uncommon to set up a foundation to oversee donations. For those not interested in running their own foundations, Donor Advised Funds (DAF) can be an alternative. DAFs work directly with community organizations or financial institutions to set up a mini foundation under the umbrella of a larger established foundation.
Most importantly, before you start engaging in any charitable giving, do your research. Especially with monetary donations, you should find out what percentage of your funds actually end up in the hands of the people you’d like to help. Not all charitable organizations are created equal, so find out how they operate, where their funding comes from, how services are dispersed and who exactly they provide services to.
Ideas for Charitable Giving
Charitable giving comes in many forms, and everyone in the family can participate in some way.
A few ideas for charitable giving for kids can include:
Saving a portion of their allowance or birthday money to donate.
Giving away toys.
Helping out neighbors with odd jobs.
Cleaning up the local parks, beaches, or other outdoor areas.
Making cards to give to people living in care homes.
For the whole family, some ideas to consider include:
Birthday fundraisers: Ask friends and family to donate money or specific items to the charity of your choice in lieu of gifts.
Sponsor a family: Around the holidays, many charitable organizations look for people to sponsor individual families and provide food and gifts for the holiday season.
Do a food drive: Contact a local food bank and find out what they need the most. Then tap into your network and start gathering donations.
Volunteer your time: Charitable organizations are often heavily reliant on volunteers to serve their clients. Whether it’s packing boxes, delivering donations, or doing administrative work, the time you can donate is very valuable.
Sign up for a charity walk, run, or bike ride: Strap on those running shoes and start fundraising!
Create Your Family Plan for Charitable Giving Today
When deciding where to focus your charitable giving efforts, remember that there are people in need outside times of crisis, so actively participating year-round can make a big difference. By choosing to target organizations that you’re passionate about, you can not only support your community but also help instill the value of being a compassionate helper in your family.
John J. Diak, CFP® is the Principal & Client Wealth Manager at Oatley & Diak, LLC in Parker, Colorado. He assists clients through many difficult lifestyle changes such as business downturns, retirement planning, divorce, the death of a spouse, and family estate issues among others. Oatley & Diak, LLC is a family-run registered investment advisory (RIA) firm that provides clients with investment management and financial planning services in a hands-on, intimate environment. Learn more about them at oatleydiak.com.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
This material was prepared by Crystal Marketing Solutions, LLC, and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate and is intended merely for educational purposes, not as advice.