As I have traveled throughout the world, I have observed that Americans are among the most generous people on the planet. We are certainly a blessed people who give with an open hand and a compassionate heart to those in need. We are moved by those whose lives have been torn apart by war and natural disasters. We give our possessions to charities that care for the poor, knowing that our extra blanket, coat or gift of food might just mean survival to someone in desperate need.
As we now enter the season of the year that focuses our attention on thankfulness and generosity, I want to introduce you to some strategies that can turbocharge your giving. There are so many thoughtful and intelligent ways to give. Consider this: About 7 percent of an American’s wealth is in cash. The remaining 93 percent is comprised of other types of assets such as stocks, real estate, business interests and other kinds of valuable personal property. The key to unlocking your giving potential with this 93 percent is a willingness to approach your giving with the same level of attention you devote to your other financial matters. Let’s look at two simple strategies that can power up your generosity before year-end.
- The Donor Advised Fund (DAF). A DAF is simply a giving fund that acts like a charitable bank account for you. Managed by a qualified charitable foundation, it provides a very simple, flexible and cost-effective solution for your giving goals. Not sure where or how much to give to a particular charity? No problem. You can donate your gift now, receive an immediate tax deduction for your gift, and decide later which charities you want to support. Do you want to remain anonymous? You have that flexibility, too. I also love using this tool to engage the entire family in giving priorities.
- Gifting Appreciated Assets. Giving non-cash assets that have grown in value is a smart way to give! Instead of selling a stock, paying capital gains tax and gifting the proceeds, gift the stock directly instead. You can also use this tool to rebalance your portfolio in a tax-efficient manner. Have a stock that is dominating your portfolio? Planning to give a year-end cash gift? Consider gifting some of that stock instead, contribute the designated cash to your portfolio, and then rebalance your portfolio. The DAF works quite well with this strategy.
If you are a business owner, or own substantial appreciated non-cash assets, or you have an estate tax problem, there are many more exciting planning opportunities for intentional, tax-wise generosity. In fact, many of the greatest opportunities for radical generosity can be found with these types of assets. The keys to unlocking your giving potential begins with discovering your goals, understanding your current situation, developing an appropriate strategy with a qualified professional team, and then implementing a plan around those goals.
- Legacy Gifts. No overview of radical generosity would be complete without addressing what happens to all you have worked so hard for when this life is done. According to the National Christian Foundation, Americans spend about 40 years accumulating wealth and about 40 minutes planning how it will be distributed after they are gone. Thankfully, I’m personally seeing more and more families interested in intentionally preparing the next generation before they receive the family’s wealth. We have probably all heard of, or may have personally observed, the damage done to those who received an inheritance without being prepared to wisely manage it.
There are many ways to establish a legacy of generosity with your family that allows you to transfer your values before your valuables and your wisdom before your wealth to the next generation. I encourage you to spend some time discovering meaningful ways to accomplish this worthy goal.
As 2014 heads into the home stretch, now is the perfect time to begin exploring a plan to give to those causes that touch your heart and bless others. God cares deeply about the local church, the persecuted, the widows and the orphans. The invisible, lonely and forgotten are never out of His sight. All people matter, all of creation matters! And keep in mind, radical generosity isn’t measured just by the size of the gift but by the motivation of the heart as well.
Remember the widow’s mite (see Mark 12:42)?
Whether we can give a little or a lot, this woman is a great example to each of us of radical generosity.
— by Janice Thompson
Thompson is a certified financial planner, and co-founder and CEO of One Degree Advisors, Inc.A frequent speaker on financial topics and a mentor for financial professionals, she also serves on the board of directors for Kingdom Advisors. Learn more at onedegreeadvisors.com.
Advisory services offered through One Degree Advisors, Inc. Securities offered through Securities America, Inc., Member FINRA/SIPC. One Degree Advisors and Securities America are separate companies.