Mississippi Money: Increase the Impact of Your Giving
By Ryder Taff
I often reference the “Save, Spend, Give” concept for teaching children how to manage money, but would the same apply to the parents? While you may want to add “Tax” as a category, the concept is the same. Giving is something that should be incorporated into any financial plan. Lets look at ways to be better givers, and increase the impact of what we do give.
Americans tend to give the bulk of their charitable donations in the month of December. Around a third of all of the donations is given in December and half of non-profits report that the majority of their gifts are received from October-December as well. This arrangement is not ideal for the receiving institution, which would like to have regular income and more budget visibility. Make your giving a regular payment and incorporate it into your monthly budget.
Donor Advised Funds are an interesting option for managing your charitable giving. You put money in the fund at any time, taking the tax deduction in that year, but can distribute to charity at any time. This is ideal for years that you have an unexpected windfall, or particularly high income, but don’t know exactly where you want your gifts to go. You can also accumulate money in the account and invest it to grow into larger donations in the future. Schwab and Fidelity both offer Donor Advised Fund accounts with a $5,000 minimum.
If you or an older parent have to take Required Minimum distributions from an IRA, this can be a great vehicle for giving. Donations from an IRA satisfy RMDs for those over 70 years old and are excluded from income when filing taxes. This means that even though you may not give enough to itemize deductions, you can still get the same tax benefit from the gift! If you were making the gift anyway, planning ahead and using an IRA might make sense.
If you want to give towards your community, it can be hard to figure out what the most effective organizations are. Chances are, you have a Community Foundation that covers your area. Seven Community Foundations cover Mississippi, more information can be found at www.formississippi.org.
We all have to spend money, we all want to save money, and we all should incorporate giving into our financial lives. Think about the important influences in your own life, and give to support their work influencing other lives.