How to Safely and Effectively Give Money to Charity 

“We make a living by what we get. We make a life by what we give.” – Winston Churchill

When giving to charity you want to be confident that your donation is maximized to have the greatest possible impact, and that it’s going to the right charitable organization. Here’s how you can make sure your charitable giving is both impactful and secure.

Understand Your Why

According to the National Center for Charitable Statistics (NCCS) the United States had around 1.8 million nonprofit organizations as of 2021. With so many worthy causes how do you even begin to choose who to donate to? You should reflect on your passions, experiences and the community needs you want to address. This will help align your giving with your values, ensuring your contributions are meaningful to you. 

How to Safely Select a Charity

Once you understand your why, and decide where you want to focus your efforts, you’ll want to make sure you pick the right charity. Here are five steps you can take to make sure you’re selecting the right organization:

  1. Check reputable charity evaluators such as Charity Navigator, GuideStar, and CharityWatch. These sites provide data on financial health, accountability and transparency as well as program efficiency. 
  2. Verify the tax exemption status of the charity is 501(c)(3).  Charity Navigator recommends asking for the organization’s EIN. If they don’t have one, don’t donate.
  3. Review the charity’s website. You should be easily able to locate their mission, programs, finances and measurable impact metrics, as well as their board members and key staff.  A reputable organization will keep their website updated.
  4. Use the IRS’s Tax Exempt Organization search tool found here to find legitimate and qualified charities.  You can also use it to determine if your contributions are tax deductible.
  5. Contact the charity directly. They should be able to provide clear and detailed responses.  Trust your instincts – if something feels off, it probably is.

Choose the Right Charitable Vehicle

Depending on your financial situation and goals you’ll want to pick the charitable vehicle that is right for you. Charitable vehicles can be as simple as direct cash donations to a charity, or as complex as a Charitable Remainder Trust (CRT).  Factors you’ll want to consider when choosing a charitable vehicle include:

  • Impact Goals: Define the impact you want to achieve and how you want to engage with the causes you support.
  • Control and Flexibility: Determine how much control you want over the distribution and management of your donations.
  • Cost and Complexity: Evaluate the setup and ongoing administrative costs, as well as the complexity of managing the vehicle.
  • Tax Benefits: Consider the tax implications and benefits of each vehicle to maximize the financial efficiency of your giving.
  • Transparency and Privacy: Decide whether you prefer public disclosure of your charitable activities or value anonymity.

Work With a Professional

Financial advisors like the wealth managers at PFS Signature Wealth can help you make the greatest impact with your charitable giving. Walking you through every step of the process they will work with you to create a detailed philanthropic plan that not only maximizes your tax deductions but ensures sustainable giving over time. You can be confident your contributions continue to meet your impact goals as they track the performance of your charitable plan, ensure adherence to your giving objectives, and make adjustments as your circumstances or priorities change.

Conclusion

Understanding your why, selecting the right charity, choosing the right charitable vehicle, and working with a professional like the wealth managers at PFS Signature Wealth are all important steps you can take to ensure that your charitable giving is safe, effective, sustainable, and meets your long term objectives.

Looking for a financial advisor to help steward your charitable giving and craft your legacy? Wondering if we’re a mutual fit? You can contact us here to schedule a conversation with our team.

The information given herein is taken from sources that IFP Advisors, LLC, dba Independent Financial Partners (IFP), IFP Securities LLC, dba Independent Financial Partners (IFP), and its advisors believe to be reliable, but it is not guaranteed by us as to accuracy or completeness. Investment advice offered through IFP Advisors, LLC, a registered investment adviser. IFP and PFS Signature Wealth are not affiliated.