Each passing holiday season reminds us of the opportunity to give to others in need, but the truth is, we can spend our time and money year-round and still reap the benefits of giving and volunteering. Although this time of year may spur initial interest in charity, hopefully, the benefits you see in your heart and pocketbook will encourage you to find ways to give back throughout the year.
In addition to feeling fulfilled by helping others, the feeling of sharing with those you connect with through your giving efforts, there are significant financial benefits as well. You have a variety of choices about how you approach philanthropy, whether you volunteer your time or donate cash or other assets to your favorite nonprofits, and any approach you take will make an impact.
Personal growth, connection and satisfaction
First, let’s start with your emotional well-being. If you’re philanthropic in some way, you probably recognize the truth in this: Giving back helps us feel better about ourselves, as many studies confirm. One such study, conducted by professors at the University of Missouri, Columbia, and the University of California, Riverside, found that those who give to others tend to score higher on feelings of joy and satisfaction. (opens in new tab) than those who do not give to others.
Another study led by psychologists at the University of Chicago Booth School of Business and Northwestern University’s Kellogg School of Management found that we feel better about ourselves longer after we give to others.
When it comes to volunteering your time, a powerful benefit comes from the sheer activity of networking – meeting new people – possibly in your current career role and/or industry. Whether online or in person, creating new career connections while helping others at the same time can be a real win. If you do, you can also talk about your volunteer activities with colleagues and clients or include your passion for giving back in your company’s marketing materials, such as in your corporate bio.
Those who see you in this new light may also be inspired to give back in their own way. You may also consider recruiting family members to join; It is a great way to instill a sense of gratitude for one’s blessings and inspire others to give to the less fortunate.
Another benefit of volunteering your time is the real ability to sharpen your current skills – and maybe gain new ones. As a certified financial planner, I have volunteered in recent years with many nonprofit organizations that are in need but do not have sufficient financial assets to qualify for or pay for services. It’s a wonderful feeling to offer solid advice to people who are ready and willing to apply it, and also to learn new ways to communicate that advice.
Remember: Time you spend volunteering for an organization is not tax-deductible, but expenses such as travel or parking costs may be. (opens in new tab).
Trimming your tax bill won’t hurt
Another form your generosity can take is donating financial assets to nonprofit organizations. Doing so can net you a tax write-off very well. Specifically, when you donate cash to a public charity, you can typically deduct up to 60% of your adjusted gross income. Additionally, appreciated assets, including long-term appreciated stocks and property, generally at fair market value, can be deducted up to 30% of your adjusted gross income, if you’ve held them for more than one year.
For those who must take required minimum distributions (RMDs), donating money from a tax-deferred retirement account such as an IRA can free you from having to include RMD amounts as taxable income in the year you take them. Specifically, you can choose to make up to $100,000 of qualified charitable donations (QCDs) each year that are not included in your annual taxable income.
Your employer may also match your donation up to a certain amount, so be sure to inquire if they will.
The bottom line is that all forms of philanthropy have a positive impact on the world and in your personal life. The amount of time, money, or both that you can share with others in need will vary throughout your lifetime, but the benefits of doing so to both you and others are meaningful and measurable.
Halbert Hargrove Global Advisors, LLC (“HH”) is an SEC registered investment advisor located in Long Beach, California. Registration does not imply a specific level of skill or training. More information about HH, including our registration status, fees and services, can be found at www.halberthargrove.com. This blog is provided for informational purposes only and should not be construed as personal investment advice. This should not be construed as an offer of personal securities transactions or a solicitation to provide personal investment advice. The information provided does not constitute legal, tax or accounting advice. We recommend that you seek the advice of a qualified attorney and accountant.
This article was written and presented with the opinions of our contributing advisors, not Kiplinger editorial staff. You can check advisor records with the SEC (opens in new tab) or with FINRA (opens in new tab).