You don’t need to be extraordinarily wealthy to include charitable giving in your financial plan.
If you regularly support charities, expect to make a larger donation in the future or simply want more of your wealth to go toward causes you care about, it may be worth including those intentions in your planning conversations.
The benefit is not necessarily that you’ll give more. It’s that you can make more informed decisions about when and how you give.
When Your Income is Higher Than Usual?
Some years are financially different from others.
You may receive a large bonus, exercise stock options, sell an investment, dispose of a property or experience another event that significantly changes your income.
If charitable giving is already important to you, these can be useful moments to consider whether your donation strategy should change as well.
Rather than making charitable decisions after everything else has happened, planning earlier can allow you to consider giving alongside the tax consequences of the year.
When You’re Selling a Business?
Selling a business can be one of the largest financial events of an owner’s life.
It may also create a natural opportunity to think about charitable giving.
A business owner who has spent decades accumulating wealth may suddenly be moving from building the value of a company to deciding how that wealth should support retirement, family and other priorities.
For someone who already has charitable intentions, the sale process can be an important time to discuss them.
The planning should happen as early as possible. A business sale can involve tax, investment, estate and succession considerations, and charitable giving may interact with several of them.
When Your Investments Have Grown Significantly?
A long period of investment growth can leave investors with assets that are worth substantially more than they originally paid.
If you’re planning to make a significant charitable gift, it can be worth discussing whether donating cash is your best option or whether another asset might be more appropriate.
The answer will depend on the type of investment, your tax situation, your portfolio and the charity you’re supporting.
The important point is that a donation decision can also be an investment and tax-planning decision.
When You’re Preparing for Retirement?
Retirement planning usually starts with a question: Will I have enough?
But once a financial plan shows that you’re on track to support the lifestyle you want, another question can emerge: What do I want to do with the wealth I don’t expect to need?
That might include helping children or grandchildren, travelling more, spending more during retirement or increasing charitable giving.
Detailed retirement projections can help make these choices easier.
If you can see how different levels of spending and giving affect your financial position over time, you can make decisions with a better understanding of the trade-offs.
When You’re Updating Your Estate Plan?
Estate planning is another natural point to discuss charitable giving.
You may want to leave most of your estate to family while directing a portion to one or more charities. Or perhaps your children are already financially secure and you’d like a larger share of your estate to support causes that have been important throughout your life.
Whatever your intentions, they should be coordinated with your broader estate and financial plan.
Registered accounts, taxes, insurance policies, investment assets and business interests can all affect the final value of an estate and how it is distributed.
When You Want to Involve the Next Generation?
Some families use charitable giving as a way to involve children or grandchildren in conversations about wealth.
Instead of beginning with inheritance, families can begin with questions such as:
- Which causes matter to us?
- What problems would we like to help solve?
- How should we decide where our charitable dollars go?
These can be useful conversations for families that want the next generation to understand not only how wealth is managed but why it exists and what it can accomplish.
When Your Financial Life Becomes More Complicated?
As wealth increases, financial decisions tend to become more connected.
Investments affect taxes. Retirement decisions affect estate planning. Business decisions affect family wealth. Charitable giving can touch all of them.
That’s why it can be helpful to work with professionals who look beyond any single financial product or account.
McInroy & Associates Private Wealth Management is one example of a practice that emphasizes looking at a client’s complete financial picture. By considering investments alongside retirement, tax, estate, insurance and other priorities, a financial planner can help determine where charitable giving fits within the larger strategy.
Click here to learn more.
You Don’t Have to Wait for a Major Financial Event
There also doesn’t need to be a business sale, retirement or major tax event before you begin thinking strategically about charitable giving.
If giving is important to you, that alone is a reason to include it in your financial plan.
Start by thinking about the causes you care about, how much you would ideally like to give and whether you want that giving to happen during your lifetime, through your estate or both.
Then look at those intentions alongside the rest of your finances.
A good financial plan isn’t only concerned with accumulating as much money as possible. It can also help you decide how to use your wealth in a way that reflects what’s important to you.
