As part of one’s wealth management, philanthropic planning means developing a strategy for long-term charitable giving. Most often the recipients are those that the giver feels connected to or aligned with.
While philanthropic giving is great for maximizing tax benefits, many see it as a way to leave behind a legacy or make an impact in the community.
If you are interested in creating a philanthropic plan of your own, here are 4 things you need to know.
1. There is Significance to Planned Giving
Philanthropic planning means planning when you are going to give your charitable gifts – and all the important details that go along with it. The significance of planning this in advance is two-fold.
One, it allows you to see the bigger picture, just as you planned for retirement or your other financial goals. You will be able to see when payments and tax considerations align so that everybody wins.
Two, planned giving allows you to plan ahead for having the funds in order and a system in place to streamline them. That way the recipient knows when and what to expect – and you don’t have to worry about it.
2. Tax Benefits May Be Available
If planned properly, tax credits may be available. This could end up saving you quite a bit of money in taxes, but the key is to know the right time to plan your gifts so that you maximize the benefit.
This can get very tricky and it is best to work with a financial advisor who has much experience in philanthropic planning in order to reap the greatest reward. After all, nobody wants to get stuck with gift-tax consequences.
3. You Choose the Right Recipient
If you are choosing to take part in philanthropy, make sure it is meaningful. Take some time to decide what causes mean the most to you – or how you would like to help your community. You want to choose a recipient whose work aligns with your vision.
Take the time to think about this step before you put your strategy in place – and continue to follow up with it regularly. Do your due diligence to ensure that the funds you have allocated and donated are being used as intended – and also make sure the recipient’s goals still align with your own.
It is ok to make adjustments to your philanthropic plan as you move into the future.
4. You Decide How Long You Want to Commit
For some, a charitable gift may be considered a one-time event. And, this may be very suitable for certain instances, depending on the situation and what the donation is for. Philanthropic planning, however, is often viewed as a long-term commitment.
How much can you commit to donating? And for how long? Sustainability is key. Sitting down with your financial advisor to look at your financial plan as a whole will help you to see how it can be best incorporated into your desire to reach your charitable goals.
Then decide how long you want to commit so that you can make the greatest impact for everyone involved.
The Investment Counsel Company is ranked as one of the Top 100 Independent Financial Advisors, offering philanthropic planning services as well as wealth management to those with $1,000,000 or more in investable assets.
