Most charitably inclined Americans make gifts to their favorite organizations and causes toward the end of each year. Often their giving decisions are less than well thought out in the rush to beat the Dec. 31 deadline for tax purposes.
Eileen Heisman (left), president and chief executive of National Philanthropic Trust, has made a career of helping donors across the wealth spectrum make smart decisions about their giving. In a recent telephone interview with AdvisorOne, Heisman offered some tips for thinking about and planning for year-end donations.
Start by making a budget. This will be relative to your wealth, and may be based on your emotions or your finances. “If you just got a big raise or a new job with a big increase, maybe your budget doubled this year,” she aid.
Next, think about causes that are really important to you. Be aware that the list may change over time, as “causes that were important to you when you were 25 probably are not as important to you when you’re 45.”
Be smart and strategic: make fewer, larger gifts to causes you strongly favor. Look at just three. Two is probably not enough, but more will tend to dilute the effect, as most people’s budgets are not large. “And if you really love an organization, you should stay with it for a while. I wouldn’t change them 100% and flip them every year,” Heisman said.
Decide whether you want to be global or local. Global philanthropy has gotten really popular, but you may want to do something in your home town or region or for your alma mater. “There’s no right or wrong answer; it’s what you think is important,” she said.