A Guide to Purposeful Philanthropy

We’ve entered the season of giving, a time when many of us are planning gifts to surprise and show appreciation for loved ones. This is also a time when people often consider charitable contributions, embracing the spirit of the season and exploring end-of-year tax benefits.

At TCI, philanthropy is a fundamental part of many financial plans we help clients create. Our goal is to educate and empower clients so they can confidently support the organizations that mean the most to them.

Benefits of Thoughtful Giving

Whether you’re planning to give now or through your estate plan, starting early is key. Intentional and informed giving allows you to maximize your impact on the causes you care about. Plus, understanding how your donations will be used can lead to greater personal fulfillment.

Choosing the Right Charity

A common question I hear from clients is: “How do I choose the right nonprofit?” My response is: Follow your passion. Ask yourself what causes resonate with you. What challenges in your community would you like to address? Is there an organization whose mission you’d like to help expand?

Keep in mind, your giving plan may evolve. What moves you today might change over the years, and charities themselves can shift or even dissolve. Revisiting your plan regularly helps ensure it aligns with your current values, community needs and opportunities.

For example, my time as a board member for a financial literacy organization recently concluded. It was an outstanding experience and I cherished helping shape financial education programs for kids. As that chapter ended, a new one began. I am now on the board of trustees for an organization that focuses on conservation, sustainability and animal welfare that closely aligns with my values. Knowing I can use my time to support a cause that I love is both fulfilling and motivating. I bring this same passion to helping clients choose causes that excite them.

Doing Your Due Diligence

Once you’ve identified your passions, do your due diligence to find the right organization to support. Here are some questions to guide your evaluation:

• What specific issues or communities does the nonprofit serve?
• Is the nonprofit transparent about how it spends its funds?
• Is it rated by charity evaluators like Charity Navigator or GuideStar?
• How much of each dollar goes toward programs versus administrative costs?
• What specific results or outcomes has the nonprofit achieved?
• How do they measure and report their success?
• Has the nonprofit faced any controversies or legal issues?
• Is the nonprofit well-connected with its community?
• Do they collaborate with other reputable organizations?
• What do beneficiaries or volunteers say about the organization?
• Does the nonprofit have a strategic plan for the future?

These questions can lead you to a charity that aligns with your values and ensures your contribution makes a real difference.

Research Resources

There are numerous resources that can help you research potential charities to support, including online resources, community foundations and personal engagement.

Online Resources

Online tools, such as Charity Navigator and GuideStar, can help you evaluate the legitimacy and effectiveness of charities you’re interested in supporting:

• Charity Navigator offers comprehensive ratings of more than 225,000 charities, highlighting the cost-effectiveness and overall health of a charity’s programs, and informing donors of not just where their dollars are going but what their dollars are doing.
• GuideStar by Candid connects people who want to change the world to the resources they need to do it. Every year, millions of nonprofits spend trillions of dollars around the world. GuideStar finds out where that money comes from, where it goes, and why it matters, and then shares that data with potential donors.

Community Foundations

Community foundations can also be a trusted avenue for researching local giving options and making an informed charity selection. Since many of my clients are based in Tucson, we have the opportunity to connect with the Community Foundation for Southern Arizona, which is very in tune with local nonprofits and their missions, needs and work. In a specific client instance, we were looking for a way to give locally, and the foundation matched her with a local animal welfare organization she felt passionate about and where she could make a tangible impact.

Personal Engagement

One of the most powerful ways to research a nonprofit and ensure alignment with your goals is through your own personal engagement: visit the charities, attend their events, or meet with members of their leadership team.

When interacting with a nonprofit, I have two pieces of advice. First, ask lots of questions! Second, stay open-minded. You might find their most pressing needs differ from your initial assumptions.

Giving Locally or Going Global?

Another question to consider is whether to focus your dollars locally versus nationally or internationally. Local charities often have more direct, community-level impact, compared to the broader, systemic reach of national and international nonprofits.

Here again, I encourage clients to think about their passion. If finding a cure for breast cancer or helping educate girls in third-world countries is where you want to move the needle, then a national or international charity may be the best fit.

Meanwhile, if you want to facilitate forever homes for dogs in your town or match local foster kids with positive role models, then a local nonprofit may be best suited to help you reach those giving goals.

Remember, you can also split donations across multiple nonprofits, giving a portion to local, national and international organizations.

The Bucket Approach to Giving

I like to think about having different “buckets” of giving. For example, you may have buckets for:

• Local giving
• National or global causes
• Ad hoc requests that align with your values
• Supporting a short-term capital campaign
• Funding an ongoing program
• Giving for a specific cause
• General operating costs

This approach can help you maintain a balanced and flexible giving strategy. Remember, your buckets may change from year to year.

“Missions not Mailers” – Understanding Administrative Costs

A common concern I hear from clients is that they want their donations to be used “for missions, not mailers.” I encourage them to remember that every nonprofit has administrative costs – not every dollar can go to buying dog food; some has to go to office supplies, salaries and keeping the lights on. These administrative costs are a natural part of running an effective nonprofit and should not deter informed giving. The key here is to be informed.

It’s natural to worry that the dollars you contribute won’t be used the way you want them to. Unfortunately, a small percentage of nonprofits are not prudent with their gifts. That’s why it’s important to do your homework on how a nonprofit uses their resources. Use your online tools, reach out to your local community foundation, and talk directly with the nonprofit to make sure you’re confident that your gift will be put to good use.

A Guided Giving Plan

Giving is a key part of many of our clients’ financial plans, and we work closely with clients to ensure that their donations align with their long-term goals. Incorporating giving into your financial plan starts with understanding what you need to achieve your personal and family goals. Then, ask yourself: Is giving a priority? If so, how much?

From there, we can begin to explore the best avenues for making those gifts. For example, Donor-Advised Funds (DAFs) and Qualified Charitable Distributions (QCDs) can provide tax benefits and flexibility. For example:

• DAFs allow for an immediate tax deduction, while letting you recommend grants to charities over time.
• QCDs enable those aged 70½ or older to donate directly from their IRA, which can satisfy required minimum distributions and reduce taxable income.

The Power of Purposeful Giving

Thoughtful giving isn’t just about making a donation or getting a tax advantage; it’s about connecting with causes that matter to you, making a real difference, and gaining a sense of fulfillment from your contributions. With careful planning and research, your generosity can create meaningful change for years to come.