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Giving season 2023: 4 ways to enhance giving and make an impact

October 24, 2023

Many people feel extra generous during the holiday season, while also looking to make year-end donations for tax benefits. Here are some ways you can make an impact this giving season.

By Adam Frank

Managing Director, Head of Wealth Planning and Advice, J.P. Morgan Wealth Management

By Adam Frank

Key takeaways

Establish realistic charitable goals that align with your values and with the amount you can afford to give.
Consider giving your time or expertise instead of — or in addition to — a financial gift to support a cause you feel passionate about.
Aligning your giving with significant income events — such as a large bonus or the sale of a business — can help you enhance the tax benefits of your giving while helping to fulfill your long-term charitable goals.
It’s hard to have a charitable strategy without an overarching financial strategy. To start creating a giving strategy, you should ideally have an overall wealth planning strategy into which you can incorporate a giving strategy.

Sixty percent of all American households participate in some level of charitable giving¹ – and Americans’ generosity has only increased during the pandemic. In 2022, charitable giving surpassed $100 billion.²

Many of us feel especially generous during the holiday season, which charities refer to as the giving season. We are also often looking to reduce our taxes with charitable gifts. Here are some ways you can enhance the impact of your giving this year.

Establish charitable goals

It’s helpful to establish your charitable goals — to what causes do you want to contribute, how much do you want to give and when? Most people have more than one cause they’re passionate about — what are your priorities? Are you more concerned about making sure you support all the causes that are important to you, or can you pick one or two to make larger gifts to, which may have a bigger impact.

Consider what fuels your passions — whether that’s environmental impacts, diversity and inclusion, medical or scientific pursuits, or your local community — and find an organization that can align with your values both in the cause it supports and the way it supports that cause. You can get basic information about most tax-exempt organizations — for example, how much of your contribution goes to the cause versus how much goes to overhead and administration — on publicly available websites such as charitynavigator.org or guidestar.org.

Evaluate the size of your gift and how it will be used. Do you want to make a gift to a large organization, or would you prefer to make a gift to a smaller organization where your gift might have a bigger impact or where you can have some input into how your money is used?

Contribute your time

Most charities welcome the contribution of time and expertise as much as, if not more than, contributions of cash. If you don’t have a tax need to make a financial contribution, or you aren’t in a position to do so this year, consider volunteering for an organization that aligns with your philanthropic interests.

Many smaller charities lack a staff of fundraisers; you can make your impact go even farther by helping to organize a fundraising event such as a walk or bike ride, a bake sale or some other idea that allows you to participate without requiring a significant cash commitment.

Time your gifts

For many people, a tax deduction is one motivator for making larger charitable donations. Even if you normally take the standard deduction, there are ways you can take advantage of tax benefits that are available if you make a large enough gift that would entitle you to a larger itemized deduction.

If you have a large taxable event — you get an unexpected bonus, or you sell stock or own a mutual fund with a large capital gain, or you sell a business — consider making a large contribution in the same year the event occurs to maximize the tax benefit.

For example, if you normally give $5,000 to charities each year, but this year you’ve sold a business and generated a large capital gain, consider opening a donor-advised fund (DAF) account and contributing $50,000 or $100,000. (If the amounts are larger you could also consider a private foundation.) The money in that account can only be given to charities.

You can think of it as a larger amount based on the gain — but in a way that will allow you to deduct the entire amount this year (subject to tax law limitations) and still take the standard deduction in future years. And going back to the charitable strategy, having a large amount of money in an account that can only be used for charity gives you the time and ability to think about how you want to distribute that money.

Have a strategy

Perhaps we should have started with this, but having a giving strategy without a broader financial strategy for yourself is a little like having dessert without eating a meal — it’s delicious, but it won’t sustain you long term. A well-structured financial strategy can be your blueprint into which you can incorporate your strategic charitable planning — it can help you determine how much you can afford to give without risking your other important financial goals.

Your financial and your charitable strategies can work hand-in-hand. Working with a financial advisor to create a financial strategy, and with your legal or tax advisor on the impact of your charitable strategy, can be the first step to making a bigger impact than you thought possible.

This giving season, give yourself the gift of a wealth management strategy.

References

Donor Box, “Nonprofit Statistics 2023.” (June 11, 2023).

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