Most of us have an urge to give. We want to share the wealth and do good in the world. More than half of Americans donate to charity every year, and these donations add up to over $1 billion – every single day.
But some people hesitate to engage in charitable financial giving over concerns that if they give too much away, they won’t have enough for retirement.
If you’re a would-be giver, we have some strategies that not only allow for (generous) charitable giving but actually help strengthen your financial position, too. Impossible? Not at all.
More Than One Way to Give
Write a check, deduct the amount on your taxes (if it’s large enough), and that’s the end of it – or so most people think. While this is the most common way to give to charity, it’s not the only way.
In our financial planning philosophy, we believe in getting more than one use out of every dollar you touch. This is how you see financial gains more quickly and with less risk. And it’s not just applicable to building wealth but to charitable giving, too.
So when considering donating to a worthy cause, first rid yourself of the idea that there’s only one way to do it, because that mindset is likely holding you back from giving generously.
Strategies to Strengthen Your Financial Position Through Giving
When we create a Financial Treatment Plan with one of our dentist clients, we have a number of smart financial giving strategies to choose from. Let’s look at a few briefly.
One strategy is to “turbo tithe” where, instead of giving cash, you give in the form of stocks or some other asset while eliminating capital gains taxes. Then you repurchase that same stock or asset, now at a new cost basis that will save you on capital gains taxes in the future when you go to sell. Not only have you given to a worthy cause, but you’ve also saved on capital gains – twice.
For large donations, other options include setting up a charitable remainder annuity trust (CRAT) or a charitable remainder unitrust (CRUT). Trusts are great tools to protect your assets, ensure money goes where you want it to go, potentially save on taxes, and even bring your family or chosen cause a steady income stream. If you decide on a trust, work with a financial professional and an estate planning attorney to make sure it’s set up correctly.
Enjoying Your Money Now
Many people choose to leave money to charity in their last will rather than donate during their lifetime. But wouldn’t you like to see the impact your donation could have in the world now? We believe in enjoying your money now, and that includes enjoying the satisfaction of being a generous donor.
For more about smart financial giving strategies, retiring with 100% of your income, and more, check out our book that helps dentists plan for a rich retirement, Your Retirement Smile, and visit our website.
Source for $1 billion statistic in the first paragraph: