Now, more than ever, people are putting their money where their values are.

We’re not just saying that because the holiday decorations are coming out. Recent research shows just how passionate people have been in supporting the causes they care about: According to Giving USA, charitable giving reached a record $410 billion last year, with 70 percent of that total coming from individual donors. And it’s not all older and wealthier Americans making a difference. Millennials are the only generation to see their average donation steadily increase over the past eight years, according to a 2018 report from the Blackbaud Institute, with just over half saying they donate to charitable causes.

So if you’ve had your local food bank, arts organization or animal shelter on your mind more recently, you’re in good company. But before you write that check, answer these five questions to help make giving a more thoughtful part of your financial plan.


If giving is an important goal to you, then consider budgeting for it the way you would any other financial goal. Don’t get too caught up on whether you’re giving too much or too little; after all, how much you want or can afford to donate is personal.

Once you’ve come up with a figure that works for you, decide when you want to give. More than half of nonprofits report they get most of their funding between October and December, and it makes sense — the holiday season is when the support letters arrive in your mailbox.

But there's no reason you can’t break down your giving into your budget year-round. Many nonprofits accept recurring monthly donations via credit card as well as auto transfers you can set up through your bank or other payment services like PayPal. Setting up regular payments or donating periodically year-round is a great way to be more deliberate about giving, versus waiting to see what you can afford to donate after gifts and holiday travel eat into your budget.

Another good option for year-round giving is a payroll deduction, suggests Phil Roemaat, senior advanced planning attorney for Northwestern Mutual. Check with your company to see if they will let you send a portion of your paycheck (it‘ll be post-tax) directly to a charity. If your company participates in workplace giving, it will likely have a list of charities to choose from, and may even match your donations.


There are lots of ways to give, but here are a few options to consider:

Cash. Perhaps the most obvious method is to simply cut a check to your charity of choice. Easy enough — and you’ll finally get to use that checkbook that’s been collecting dust in your desk drawer.

Stock. You can donate shares of stock you own and, if you’ve held your stock for more than a year, you can get a tax deduction on the fair market value of your shares. “So if you bought shares in a company when it was $20 a share and now it’s trading at $100, you’ll get the tax deduction for $100,” Roemaat says. Plus, he adds, you won’t have to recognize that $80 in gain as income, the way you would have to if you were simply selling the stock for more than you bought it for. But there are stricter limits to the amount of tax deductions you can take when donating stock based on your adjusted gross income and the type of organization you donate to, so work with your tax advisor to understand what that means for you.

Other Kinds of Property. Maybe it’s time to get rid of that sweatshirt that helped you survive college. Or perhaps you’re ready to find your precious first car a new owner. Many charities accept donations ranging from clothing to computers to cars, depending on their needs. Just remember that if you decide to itemize your charitable contributions, your donations will be based on their fair market value (what they’re worth at the time of the donation, not what you paid for them originally). Cars also have more complex IRS rules on how they are valued, so it’s important to understand that before you donate.

A Donor-Advised Fund. If you’re looking to make a somewhat larger gift, a donor-advised fund, or DAF, might be worth considering. The money is invested for charitable purposes — but you don’t have to decide right away where your donation goes. You can make recommendations to the fund manager over time about which charities you’d like to see receive grants. Just be aware that DAFs require a minimum amount to invest (typically somewhere between $5,000 and $10,000, though it could be more) and “make sure to double check the investment and administrative fees,” Roemaat says.


Whether you can write off charitable donations on your taxes really depends on whether you plan to itemize your deductions or take the standard deduction (you can do one or the other, but not both).

Under the new tax law, the standard deduction nearly doubled to $12,000 for individuals and $24,000 for married couples. So it’s likely that a lot more people won’t choose to itemize because the standard deduction would be higher anyway. But if you think your itemized deductions would come close to the standard deduction amount, you can use your donations to help get you over the limit.

You can also donate what you would have given in 2019 before the end of 2018 in a strategy known as bunching itemized deductions, Roemaat says. That way, you can itemize your deductions one year and take the standard deduction the next year. DAFs can also play into this strategy, he adds, since you can get a tax break on what you put into a DAF now, even if the money won’t be distributed until later.

But whether your donations are big or small, know that your gift is only tax-deductible if it’s for a 501(c)(3) charity or a religious organization — and you’ll generally need a receipt or record of your gifts from the organization if you’re planning to itemize. “That written acknowledgment is part of what you need to have on file if the IRS were to ever come and audit you,” Roemaat says. “Good record-keeping is a must.”


Naturally, the organizations you donate to should reflect your values and the causes you believe in. But beyond that, it’s important to double check a few things before you give. For starters, double check that 501(c)(3) status, which means the charity qualifies as a tax-exempt organization with the IRS. (One quick way to tell is if they make their Form 990 available online, which charities are required to make public.) A common mistake is when people give to a cause, such as a political campaign, believing their contribution will be tax-deductible, only to find out later that they aren’t giving to a 501(c)(3) organization.

Also, check out a nonprofit’s annual report to see where its money goes and how it defines success — is this in line with how you’d like to see your donations being used? Websites like Guidestar and Charity Navigator can help you track this type of info down.


Donating money is one of the most obvious ways to support a cause, but it’s not your only option. Here are other ways to put your values into action.

Crowdfund. If your pockets aren’t as deep as you’d like, get your friends involved. Use your birthday as an excuse to create a fundraiser on Facebook. Other charitable sites like Mightycause or GoFundMe can also help you easily set up a giving campaign and promote it on social media.

Shop Online. You’re going to shop for holiday gifts anyway, right? Sites like AmazonSmile, Goodshop and will donate part of what you spend to your charity of choice.

Include Charities in Your Estate Planning. If you’re looking to create a legacy of giving even after you’re gone, you could include your favorite charity in your will or trust. You could even add them as a beneficiary to a life insurance policy or a retirement account.

Volunteer. We know — you keep planning to volunteer, but your busy schedule always gets the best of you. Why not start a new tradition of setting aside time to volunteer with loved ones? Get in touch with local nonprofits to see if they need help (the sooner the better, as the holidays are when charities get the most inquiries) and round up family and friends to decide where you’d like to spend your time. It’s a great way to make a difference together.

This article is not intended as legal or tax advice. Northwestern Mutual and its financial representatives do not give legal or tax advice. Taxpayers should seek advice regarding their particular circumstances from an independent legal, accounting or tax adviser. Tax and other planning developments after the original date of publication may affect these discussions.

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