5 Steps to Creating a Charitable Giving Plan
Date: April 10, 2023

5 Steps to Creating a Charitable Giving Plan

For many of us, giving back is one of the most meaningful things we can do. Whether it’s donating our money, volunteering time, or simply finding ways to serve and support those in need, charitable giving provides powerful opportunities for personal growth and renewal. 

However, many people don’t know where to start when it comes to creating a comprehensive and effective charitable giving plan. That’s why, in this blog post, I’m providing five steps to help you craft an impactful strategy for making your philanthropic dreams a reality.


Please explore the following with us:

  • Define your charitable giving objectives
  • Research charities aligned with your goals
  • Determine an amount you can afford to donate
  • Utilize tax deductions to maximize your donation
  • Follow up on your donations throughout the year


1. Define Your Charitable Giving Objectives

Intelligent philanthropy involves getting thinking ahead. In other words, defining your charitable giving objectives can help you save time, money, and energy while you support the causes and charities that are most important to you. To start, ask yourself what impact you would like to make with your donation(s) and whether any special criteria apply. 

Make sure to consider saving, investing, and budgeting in order to achieve the most significant charitable returns on your financial resources, as well. By setting indicators and measuring before investing heavily, you should be able to help ensure that your hard-earned dollars are well spent. 

Staying organized never hurts, either. So, make sure to establish a system of tracking information so you will be able to easily keep up-to-date records of donations and associated accomplishments.


2. Research Charities Aligned With Your Goals

Donating wealth to charity can be a wonderful way to make a meaningful impact in the world and leave a lasting legacy. At the same time, before making any donations, it’s important to research and identify charities that are aligned with your financial goals. Take some time to educate yourself on their mission statement, financial model, reform history, and partnerships. 

These things are essential to understanding where your money is/will be going. Doing so can also ensure that your wealth goes towards facilitating positive activity rather than simply sustaining an organization without any tangible results or relief efforts. 

Granted, researching charities can be time-consuming. Nevertheless, after you’ve done it, you can have an in-depth knowledge of where (and how) your contributions are likely to be used.


3. Determine an Amount You Can Afford To Donate

Charitable giving is important, but so is determining how much you can really give each year. This can be a challenge, but it’s an essential step to take before you start allocating money for the cause or organization you wish to support. With this in mind, make a budget and determine what you need for expenses and savings, beforehand. 

When you’ve figured out an amount that works best for your financial situation, you can schedule regular payments to avoid forgetting or falling behind. Remember: Not everything has to come from your wallet, either; giving time, energy and skill can be just as valuable.


4. Utilize Tax Deductions To Maximize Your Donation

Thankfully, charitable giving doesn’t always have to take a big bite out of your bank account. By utilizing tax deductions you may actually be able to give more—without breaking the bank. People are spending thousands (and sometimes tens of thousands) on charitable donations, but have no strategy for doing so. 

In many cases, charitable contributions are a substantial portion of their income, often as much as 10%-20% or more. These are not trivial amounts of money. Prudence dictates having a strategy, such as leveraging Qualified Charitable Distributions (QCDs) from an IRA, for example.

We have customers who use QCDs to fund 100% of their charitable giving by doing this. They often save hundreds or even thousands of dollars in taxes while donating $30,000 or more each year to churches & other 501(c)3 charities. Donor-advised funds (DAFs) are another great way to make philanthropic contributions while retaining maximum flexibility, as well. 

With a DAF, an individual can make their tax-deductible donation immediately—and then direct where it is spent at a later date. The ability to give as you earn and allocate funds when you choose makes it much easier to plan long-term giving strategies. You can also contribute smaller amounts over time to one fund or issue, taking advantage of compounded impact opportunities while you’re at it. 

Maybe best of all, any accumulating wealth in a DAF grows tax-free allowing you increased granting capacity for the future. DAFs provide tremendous benefits for donors managing their personal foundations or corporate giving programs considering the significant operational and compliance costs these entities incur.

We Proudly Provide Retirement Planning & Wealth Management for Veterans, Too.


5. Follow Up on Your Donations Throughout the Year

Strategic charitable giving isn’t a one-and-done process. It requires follow-up efforts throughout the year to ensure that your donations are funding causes and organizations you care about with the best possible impact. Again, it’s always best to start by researching potential nonprofits to support. Look into their services as well as their success rates. 

Once you’ve committed to a donation, make sure to keep any receipts. This allows tracking, for tax purposes, but it should break down any restrictions or criteria associated with the gift, as well. Remaining involved in a charity after you’ve donated can help you keep tabs on how your money is being used. 

It’s something you should check in on annually or as frequently as necessary for both your personal satisfaction and any legal requirements. Watch for progress reports reflecting changes over time and be open to shifting your donations when it could help a cause better reach its goals or address new needs/concerns in your community.


Action Items

These are unusual times, economically speaking. If you’re concerned about the bear market, here are some additional tips:

  • Don’t Quit. Quitters never win.
  • Minimize Withdrawals. Minimize or suspend withdrawals so your portfolio recovers quicker when markets turn around.
  • Buy Low. In other words, temporarily increase your 401(k) contributions. The 2023 limit is $22,500 (or $30,000 if you’re age 50 or older). Max your IRA/Roth contributions, as well. The 2023 limit is $6,500 (or $7,500 if you’re age 50 or older).
  • Plan. In other words, update your financial plan, or if you don’t have a plan, call us today to get started.

Because inflation is high and interest rates are rising:

  • Minimize cash & fixed income. Certificates of deposit, bonds, & fixed annuities all lose purchasing power during times of high inflation.
  • Minimize fixed income. Bond values go down when interest rates rise (because floating-rate assets gain value). Rebalance and diversify your portfolio.
  • Reduce variable rate debt. Pay off or pay down any variable-rate debt before your rates rise even further.

Sapiat Asset Management provides comprehensive financial planning in Tennessee. We’re ready to be your Greeneville, TN financial advisor. Contact us to learn about our investment advisory and financial services.

Sapiat Asset Management is a Fee-Only, Independent, Registered Investment Advisor (RIA), specializing in goal-oriented financial planning and investment management for Gen X Individuals & Families, their Businesses, & the Trusts that benefit them.

Steve Dick