When it comes to giving, grown-ups are exceedingly generous. A 2013 survey by nonprofit software provider Blackbaud found that 72 percent of people ages 49 to 67 make charitable contributions, and represent 43 percent of U.S. donors. The average donation was $1,212 across four to five charities.
While that kind of spend isn’t getting your name on the side of a hospital wing or university building, leaving an enduring legacy doesn’t require millions. With a bit of strategy and planning, you can leave your mark on the world long after you’ve gone, supporting causes that are important to you. Here’s how.
Find what you care about. Chances are, there’s some need in the world that’s important to you. Whether you love animals or want to see more people have access to potable water (780 million people in the world don’t, according to Water.org), hone in on the causes that touch your heart. Think about the needs in your community, place of worship, or the world at large. What are the key issues in each? Which problems would you like to solve? Those are the causes that define your values and are going to give you satisfaction in supporting.
Do the math. Once you have an idea of where you want to focus, you need to get a handle on how much you can give, says Paul Jacobs, CFP, the Atlanta-based chief investment officer of financial advisory firm Palisades Hudson Financial Group, LLC. What assets can you reasonably donate? Would you prefer to donate in increments over time or in one lump sum as a bequest? It’s important to consider your donation goals in conjunction with your other financial priorities, including saving and preserving retirement income for later in life, Jacobs says.
Get involved with your cause. You’ve got a cause and a wad of cash — or stocks or other assets. Before you start giving your hard-earned money away, get involved. Spend some time volunteering with your chosen charity so you see how they operate and what their real needs are.
When retired physical therapist Elaine Arthur followed her love of animals and began volunteering for the Cummings School of Veterinary Medicine Wildlife Clinic at Tufts University in 2003, she immediately began noticing various needs. After she was with the organization for about a year, she realized they spent too much money replacing filters on small humidifiers for reptile habitats. She donated a room humidifier that cost roughly $100 and maintained it, replacing the filters every five to seven months. Since then, Arthur has donated various pieces of equipment to the clinic, including a piece of optometry equipment used to treat raptors that was “a stretch” for her financially.
“It wasn’t like I had $10,000 lying around, but I used some retirement savings. I hope I don’t need it later on, but this was something that was important to me,” she says.
Check out the charity. Even if you fall in love with the charity and the cause, do some due diligence. How do they spend their money? Charity Navigator is a great resource for getting information about various nonprofits, including how much of every dollar goes to supporting programs vs. administration. Jacobs recommends looking for ratios of 90 cents of every dollar donated spent on programs. Charity Navigator has a list of typical administrative spending percentages based on type of charity, which allows a bit more latitude for percentage of each dollar spent on programs.
Make a plan. It’s probably not a good idea to just show up with an expensive piece of equipment or a surprise donation. Meet with the organization to discuss your giving plans, Jacobs says. It’s also a good idea to involve your accountant. Structuring your donation properly could lead to important tax advantages. You might take advantage of the fact that donations to 501(c)3 organizations are fully deductible up to 50 percent of your adjusted gross income. If you’ve accumulated assets in your IRA and are at least age 59½, you may be able to make donations directly from your IRA in 2013 and not have the transfer affect your gross income. This is an area where good financial advice can pay off, so be sure to check with your financial advisor about the best options for your situation. You may also want to add the charitable organization as a beneficiary to your retirement account or life insurance policy as a bequest.
Be creative. Arthur’s approach to philanthropy included donating various pieces of equipment for which she saw a need, funding them largely out of her retirement savings. In addition, she has funded a scholarship prize since 2007 that is given to a graduating fourth-year doctor of veterinary medicine (DVM) student who has demonstrated an outstanding commitment to managing and preserving wildlife, especially in New England. You might fund a book collection for your local library or a small scholarship at your alma mater.
Don’t be modest. It’s OK to want your legacy to be visible. Whether it’s an event or scholarship named for you or a plaque installed in the meeting room you redecorated for your favorite children’s charity, it’s OK to be recognized. In fact, your example of making a difference in small ways might inspire others.