Charitable giving is a powerful way for high-net-worth individuals to give back. It is a purposeful and powerful activity that provides a unique opportunity to make a lasting, positive impact on society.
Beyond the intrinsic satisfaction of giving, philanthropists who possess significant wealth to sew back into the lives of their fellow humans can also enjoy notable benefits. These include nitty-gritty elements, such as substantial tax breaks, as well as the personal fulfillment that comes from contributing to communal betterment and building a legacy of giving back.
If you’re a high-net-worth philanthropist, exciting times are ahead. But you want to make sure you’re investing in your giving the right way. Thoughtful philanthropy leads to maximum impact. Here are a few strategies to help you devise effective methods to optimize your charitable endeavors.
Take the Time to Lay the Foundation
Charitable giving at scale is more than writing checks or sending gifts. It’s a complex and nuanced activity that requires structure. With that in mind, if you want your giving to have a genuine and efficient impact, it’s important to start by investing time in laying a proper foundation.
This begins with building the right team. Find individuals with wealth management expertise to help guide you and inform each decision. These can be peers with time to donate as well as third-party wealth management professionals with essential skill sets and institutional knowledge.
It’s also important to structure your giving. For example, Jason Stephens at UBS’s The Stephens Group, emphasizes that both private foundations and donor-advised funds are efficient ways to make charitable contributions that coordinate with a larger charitable plan. While the specific choice will depend on your scenario, establishing a structure of some kind is important.
Select the Right Causes
You always want to make sure you’re choosing the right causes to support. This has to be more than simply finding a need. That’s the easy part.
Where the nuance comes in is finding which cause or charity is the right one for you. This should start with personal interest. While you don’t want emotion to drive everything, it’s important that you care and have a vested interest in the causes that you support.
After that, consider each option in the same way that a business might. Use charity rating tools like CharityNavigator.org to gauge the quality of each choice. Also, consider how your team can handle supporting each charity and make sure your team members buy into the direction of your giving, too.
Leverage Your Donations Where It Matters
You already know what it’s like to fight for maximum profitability at work. Now, it’s time to apply that same tenacity to your philanthropic efforts.
One key factor to keep in mind as you donate is to make sure you are generating maximum societal change. Don’t just give money and look the other way.
Make sure you’re tracking data and seeing a difference as you go along. Consider this aspect with your team before you get going. What are good KPIs that you can aim for as a group? Get these set up and track them.
Be Holistic in Your Giving
Philanthropy is more than just shelling out cold, hard cash. Philanthropy New York points out that the cultural concept of modern philanthropy centers around a few key influences.
For example, in both the past and the present, a large portion of philanthropic behavior originates from strongly held religious traditions and convictions. The communal aspect of Native American life has also percolated into the practice of giving at scale. Widely accepted cultural beliefs in mutual assistance are also a driving factor.
In other words, as a philanthropist, you’re not just being practical as you help someone in need when you give. You’re participating in a larger cultural movement. You’re making waves and impacting lives beyond dollars and cents. Factor that into each move that you make.
Don’t Be Afraid to Maximize Tax Breaks
It goes without saying that you want to benefit from the tax breaks that philanthropy offers to high-net-worth individuals, too. Even if you aren’t interested in saving money for yourself, taking advantage of tax breaks can give you the ability to give even more in the future.
There are many ways you can maximize tax benefits as you go along. Donating appreciated assets rather than cash is one common option. Using charitable donations in conjunction with tax-loss harvesting is another.
This is another step where having a team in place can pay dividends. Work together to proactively find the best combinations of tax advantages as you give. That way, you can maximize your gifts and even sew the seeds for future giving in the process.
Engaging in philanthropy is an admirable activity. However, it will only have a lasting effect when done properly. If you’re a high-net-worth philanthropist looking for ways to make a maximum impact, use the tips above to coordinate, direct, and supercharge your giving not just now but for the foreseeable future.
Read the full article here
