Donating vs. Creating a Legacy That Endures
You may like to give back to your community. Whether you support local charities, leave funds for educational opportunities, or donate money to advance medical research, giving may have an immediate and powerful impact. If you want your charitable giving to have a lasting impact, you may want to consider legacy giving.
Immediate Impact vs. Building a Legacy
When most people think of giving to charity, they consider how much they might afford to donate each month or year. While donating to charity is a great way to give back, many people want to know how they might use their wealth to create a lasting impact.
Legacy giving doesn’t mean donating more money. It means being intentional with where and how you give. Whether you want to give back to your community, fund life-changing medical research, create opportunities for students, or preserve the environment, creating a giving plan may help you pursue your goals.
If you’re looking to start giving back today, there are a lot of great options. But what about planning for the future? When you build your legacy with charitable giving in mind, you may create an even bigger impact.
Giving today means donating to charities and nonprofits that you care about. By doing your research and donating, you may help make an immediate difference in the lives of others. Building your legacy through charitable giving means thinking about how you may use your estate to make a difference. In addition to giving during your lifetime, consider what happens to your money and assets when you’re gone.
Start With Your Values
If you want to leave a philanthropic legacy, it’s important to create a plan that makes sense for your situation. And the first step in that plan is identifying your values.
What issues are you passionate about? What causes does your family care about most? Are there specific charities that have made a difference in your life? Once you know what matters most to you, you may find charities and organizations that align with your beliefs.
Think Beyond Annual Donations
For many people, charity involves writing a check at the end of the year. But donations like these may feel disconnected from your longer-term financial plan.
Consider some of these alternatives to yearly gifts:
- Set up recurring donations that automatically donate each month or year.
- Volunteer to lead or serve on nonprofit boards.
- Create scholarships or endowments at your favorite university.
- Establish a donor-advised fund that may help grow your donations.
- Make charitable gifts part of your estate plan.
- Donate stock or assets instead of cash.
There are many ways you might donate to charity that still let you pursue your financial goals. As you create your legacy, consider giving strategies that may grow with your estate.
Include Your Family
Do you want your kids, grandkids, or great-grandkids to grow up volunteering and giving back to society? Maybe you want them to value generosity. Including your family in your charitable decisions may help instill these values that might last for generations. Considerations to discuss with your family include important causes, how to research charities and nonprofits, and following the recommended practices for giving back. Discussing your philanthropic goals may help teach your family the importance of giving.
Make Giving a Part of Your Financial Plan
Don’t let your generosity prevent you from focusing on your financial goals. When you plan for your future while creating your legacy, you may give back without sacrificing your retirement or wealth transfer plans.
When you give to charity, you may even be able to donate appreciated securities instead of cash, which may be a tax-efficient way to give. Talk to your financial professional about the different ways to give back while also keeping wealth-building as part of your plan.
Focus on Impact Instead of Dollars
You may have heard the adage, “Give a man a fish, he eats for a day; teach a man to fish, he eats for a lifetime.” How charitable donations are used may matter just as much as the amount of money you give. Instead of making an annual donation to a nonprofit, maybe you could use your professional skills to help teach them how to operate more effectively.
If you want your donations to have an impact, here are some things to consider:
- How efficiently does a charity use its funds?
- Do they have a way to measure their performance?
- Does my donation help provide long-term support?
- Could my gift also encourage others to donate as well?
Some families even choose to work directly with nonprofits by providing guidance and leadership. No matter how you decide to give, make sure your donations are going to worthy charities and creating positive change. It's also a good idea to re-evaluate your charitable giving plan annually to see if any changes need to be made on the giving or receiving end.
Work With Professionals
When your wealth starts to exceed what you could manage on your own, it’s typically a good idea to work with financial professionals. Whether you want to give back locally or your goal is to leave a large charitable gift in your estate plan, we could help.
