Joy in Giving: Be a Smart Year-End Giver

As my one contribution to the social well-being of my neighborhood, I update the signs at the entrance to the subdivision. My seven-year-old particularly enjoys helping move the big letters around and then driving by our handiwork.

The current iteration of the signs reads: “Share the Joy of the Season.” No matter your background or creed, you can’t deny that the level of joy is up across America during the holidays.

Americans predilection toward charitable giving contributes to that sense of joy. It’s hard to tease out whether the seasonal good-feeling prompts people to think about their charitable giving, or if end-of-year charitable giving ups the seasonal joy. I think it’s probably a virtuous cycle.

For some people, though, the idea of giving doesn’t always mesh with practice. Maybe you aren’t sure where to give, how to give, or if your gift will count.

Here is a secret: Americans are givers at heart. If you’re an American, you have all the requirements you need to be a giver.

If you’re ready to say, “yes” to giving, here are a few ideas to really make the most of it:

Move the Needle You Want to Move

While checking out at the bookstore in the Dallas airport, the overly chipper cashier asked if I wanted to donate a dollar to aid those effected by the California wildfires.

A mere dollar! And to support a disaster that happened very close to several of my closest friends.

And I declined.

The human mind does funny things. The concept of moral licensing tells us that I probably would have felt pretty good about myself for giving that measly dollar – after all, it was for a good cause! The cashier would know I was a Good Person!

But here’s the problem: I might have even felt so good that I might lower some future charitable giving, particularly giving I do without anyone watching. That giving probably would have been bigger, and to a cause I care more about.

I want to give you moral license to say no to giving outside of your priorities. Instead, take time to think about the big changes you’d like to see in the world. What events riled you up in the past year? What tragedy, big or small, really strummed at your compassion chords?

These are the causes that should benefit from your support. Whether you are giving away $25 or $25,000, you want your money to have the biggest impact it can. Don’t crowd out the impact you can have by tossing dollars beyond what you care about.

Take the time to map out the causes and organizations you most want to give to, and divide your charitable pie amongst those groups as you see fit. You’ll move the needle on something that matters to you – and you’ll probably end up giving a lot more than a dollar.

Give More By Being Tax Smart

Giving selflessly doesn’t mean you aren’t giving with your self-interest in mind, particularly when it comes to the tax benefits charitable giving offers.

If the only reason you give to charity is so you can save on taxes, then you’re doing it wrong. However, the tax benefits should allow you to give more than you otherwise might, if you play your cards right.

One of the most tax-friendly ways for an individual donor to give is with a contribution of appreciated securities that you’ve held for at least one year. Rather than liquidate the stock, you transfer the security directly to the charity. The charity then sells the stock and keeps the proceeds.

You as the donor take the tax deduction at the value of the stock on the day you transfer the asset, and you also avoid paying the capital gains. Giving appreciate stock is a great way to give more than your cash flow might allow. (I’m no tax expert, so, to make sure you appraise the value appropriately, work with your tax advisor or attorney on the valuation).

The other big tax tip is for those who, in light of the revised tax code, are hovering in that funny space on the border of taking the new, higher standard deduction or itemizing. Many tax experts recommend a strategy called “bunching” to help you maximize your tax deductions while also leveling out your giving to charity.

It works like this: front-load, or bunch, your charitable gifts in one year so that you itemize, and then the next year you take the standard deduction. (For a great, number-filled example, see the “Consider Bunching Gifts” section of this article by DonorsTrust CFO Jeff Zysik.)

A donor-advised fund, or DAF, makes bunching and giving appreciated stock easy. A DAF works like a charitable savings account. You can put your money in and immediately get your tax deduction, and then can take time to make grants out of the fund – you aren’t bound, from a tax perspective, to getting gifts out before year’s end. That makes a DAF a great place to park money for both this and next year’s giving, or to give you one place to give that appreciated stock instead of doling it out to a bunch of separate charities.

If a donor-advised fund sounds like a tool that would help your giving, look at the Novus Society, a program at DonorsTrust that offers folks under 40 access to a donor-advised fund at lower cost than most other places (and currently offers a $500 match when you open the account).

Give Future You A Gift

My final year-end recommendation is more of a year-start idea: make a plan to set aside some charitable dollars every month in 2019.

It’s tough to part with money at the end of the year. Whether we have some Christmas cash from Aunt Martha or a generous year-end bonus, it’s just harder to part with the money in front of us than if we have funds set aside for a specific purpose.

Instead, resolve to set aside money every month for your year-end charitable giving. If you usually give away $3,000 a year, commit to putting $250 a month in a savings account or a donor-advised fund. Set an auto-draft from your bank so you never even see the money.
You’ll get to the end of the year and boom! Pot of gold waiting for you to give to charity.

You might end up with some cash at the end of the year you want to give as well. Suddenly, you’re even more generous than you realized you could be. That’s a win all around.

Be A Giver

Charitable giving truly does help spread the joy of the holiday season. It can increase your own joy as well, allowing you to have an impact on causes you care about, save a little on taxes, and overall make your community a bit better.

Go ahead, don’t hold back. Be a giver. It’s a gift that keeps on giving.