Six Ideas to Stretch Your Charitable Dollars

Giving to charity is a profoundly personal act. It's rewarding to help the communities and causes we care most about. But effective, purposeful charitable giving needs a strategy. And strategic giving involves planning, both to maximize the benefit for your favorite charities and to increase your own tax benefits.

Here are a few tips to consider:

Make choices now to make the biggest impact

If you’re like many people, there are numerous charities, like Drexel University, that are important to you. But keep in mind: you may be able to make a more significant impact if you limit the charitable organizations that you choose to support each year to the ones you care most about and then make a larger gift to each. Consider what inspires you to give and focus on the difference you hope to make. Clarifying your intentions can help to make your giving more meaningful – for you and for the organizations that matter to you and your family.

Make unrestricted gifts “without strings”

Instead of designating your charitable gifts for a special purpose (such as funding a scholarship), consider providing general support to your chosen organization. Often, unrestricted gifts may be the most impactful option for giving. They are not only vital for a charity’s overall sustainability, but the flexibility to use unrestricted funds for the most mission-critical priorities ultimately empowers an organization to deliver stronger results.

Make a multi-year gift commitment

Multi-year pledges are popular with donors who want to make larger, more significant gift commitments and fulfill them at a pace that suits their financial situation. Additionally, giving in this way provides on-going support to a nonprofit, ensuring that long-term projects and initiatives will have the funding to be seen to completion. This option also allows you to plan ahead, simplifying your charitable giving decisions for a period of years.

Make philanthropy a family affair

A donor advised fund (DAF) is a charitable giving tool that can be right for anyone who wants to involve family members in supporting favorite charities. A DAF allows you to streamline your giving, while maximizing both the tax advantages for yourself and increasing the positive impact for the recipient organizations. Creating a DAF is fairly simple: a donor establishes the DAF with a qualified 501(c)(3) organization (sometimes called a sponsoring organization) and makes tax-deductible contributions to the fund. You then recommend grants to support qualified charitable organizations, like Drexel, over time. Many families establish DAFs to involve the younger generations in decisions about charitable giving and build a tradition of philanthropy.

Make tax-savvy gifts

One of the most mutually beneficial and tax-smart ways to support a qualified charity is to give shares of appreciated stock or mutual funds instead of cash. You can deduct the shares’ current fair market value (not the amount you originally paid for them) as a charitable gift and avoid paying the capital gains tax you’d owe if you sold the shares and donated the cash.

Here’s an idea to make gifts of stock even more strategic:

If you believe a stock has potential for additional appreciation, donate your shares, eliminate the capital gains exposure and then buy the shares back at their market price. This strategy gives you a cost basis equal to the stock’s current value and allows you the chance to enjoy future appreciation at a stepped-up basis.

Make support for your favorite charities a part of your personal legacy

If charitable giving is important to you, your estate plan can help to make it part of the legacy you leave behind. Incorporating philanthropy into your plans can be as simple as including bequest language in your will or creating a codicil (a legal instrument that modifies an earlier will) that describes the gift you want to leave to a qualified charity, like Drexel. Alternately, you may choose to name one or more charities as beneficiaries of a retirement account (and leave other, less-taxed assets to your loved ones).

Questions about developing a powerful charitable giving strategy? We’re happy to help. Contact David Toll, JD, senior associate vice president, Drexel University Office of Gift Planning, at 215.895.1882 or giftplanning@drexel.edu.