6 steps to creating a charitable giving plan

Giving provides deep personal satisfaction, helps to make the world a better place, shows your gratitude for the communities that shaped you, and shares your values with your family for generations.

But fulfillment in giving isn’t always as simple as writing a check. When you give, you want to ensure your efforts are meaningful. One way to do this is through a charitable giving plan, a strategy that involves integrating philanthropic goals into your overall financial plan to maximize the impact of your giving efforts. 

“A giving plan strives to help you do three things,” says Dan Harris, senior vice president and national director of Philanthropic Services from U.S. Bank. “Align your giving with your values, have meaningful experiences through your giving, and create lasting impact for your family and community — whether you define community as your immediate neighborhood or the globe.”

Here are six steps to take when creating a giving plan.

1. Integrate giving into your wealth plan.

While many people donate generously, they don’t always look at the larger picture. Harris recommends assessing your giving in the context of your overall wealth planning. “People often don’t think of philanthropy as part of wealth planning but giving can be an integral part of a family’s overall financial strategy,” he says.

Factoring giving into your financial planning can ensure you address any questions about the tax implications of your philanthropy, or if charitable giving can be incorporated into other big financial events to help lessen your tax burden. 

2. Have a conversation to understand why you’re giving.

Think about what matters to you and your family, and what community or global issues you want to address. For your donations to achieve your goals, it’s important to be passionate about the cause.

Harris recommends talking about giving as a family, beginning with which charitable gifts over the past few years are most memorable. This can help you define the values and goals that drive your philanthropy. “I often hear from clients that they give to a lot of good causes. But the question is, might they feel better about their giving if they gave in a more focused way? The answer is almost always yes,” Harris says.

Take some time for introspection and discussion to help you prioritize your charitable objectives. Consider these questions to help refine your charitable giving plan.

• What nonprofits have you typically supported and why?
• Which recent gifts have been most closely aligned to your values?
• Do your values influence your charitable giving priorities?
• What results are you seeking when you give?
• Which gifts do you feel have had the most lasting impact?

A look back at your giving history can help you better align your giving with your stated values — in other words, create a giving strategy. 

3. Determine where to give.

Once you’ve solidified your reasons for giving, narrow your scope for the type of organizations you’d like to support. There are nearly 2 million recognized 501(c) organizations in the U.S., so it can be intimidating to make a choice, but these tips can help.

• Narrow your focus. Start by considering the geography and size of the organizations you’re considering. Are your goals in line with an international, national or local organization? Do you prefer small, more targeted nonprofits or larger, broader-scope nonprofits? Then, it’s time to start your due diligence, which may include extensive background research, interviews with staff leaders and board members, a strategic plan review and personal visits to the organization.  
• Evaluate the charities. While there is no one-size-fits-all metric to gauge the effectiveness of a charity, you might want to consider factors like the diversity of funding sources, administrative costs, partnerships and other collaborative initiatives. Additionally, charity ratings can be an excellent resource. You can view ratings of charities through services like GuideStar, the BBB Wise Giving Alliance and Charity Navigator. 

4. Consider various charitable giving strategies.

Depending on your philanthropic goals, overall financial plan and tax strategy, there are many ways to gift your donation to a charity. Here are a few options to discuss with your financial and tax professionals:

• Donor-advised funds. These simple funds represent the fastest-growing philanthropic vehicle, but not all are created equal. How one is structured depends on your family’s philanthropic goals and your approach to giving with options to give both locally and globally.
• Private foundations. These offer a great deal of control, making them a popular strategy for families with significant wealth. However, you’ll need to work with tax and legal professionals to help you establish and manage a foundation.
• Charitable trusts and estate plan gifts. You can support your preferred charities through an irrevocable trust. You may also want to consider making a bequest to a charity through your estate plan. This would ensure your philanthropic goals are carried out even after you’re gone.
• Impact investing. If you want to support certain causes beyond just donating funds, consider impact investing, which involves investing for both financial gains and for social good.

5. Leverage your gift.

It may be important to you to be recognized for your gifts, such as seeing your name in an event program, on a donor wall or on a building. Perhaps more importantly, your donations may give you greater influence with the organization’s board or leadership in future project planning.

Recognition can also be beneficial to the organization, as it can spur additional gifts from friends and acquaintances. “Many of our philanthropic clients are careful because they don’t want to be seen as doing it solely for the recognition,” says Harris, “but they are hopeful that it will encourage others to give as well.”

6. Involve the next generation.

For many people, philanthropy is not just a way to benefit others and satisfy a personal desire to give. It’s also a way to pass along shared values, including the responsibility that comes with wealth.

There are several creative ways to develop a legacy of family philanthropy and charitable giving across generations:

• Tell stories. Sharing stories about philanthropy can be inspirational. Consider asking family members to share their favorite giving moment of the year. The answers might be a particular volunteer experience, or the story of a particular donation that came to life.
• Create a philanthropy challenge. Challenge the younger generations to research an organization or cause they would like you to support, which often ends up driving a lot of thoughtful research and formal presentations.
• Volunteer as a family. “No matter how much money you plan to donate, volunteering and involving your family in that volunteer work allows you to see the impact on the communities served firsthand. It makes philanthropy so much more personal,” says Harris. Volunteer work can also be a great way to pass that legacy of philanthropy to the next generation of children and grandchildren, he adds. “Values are more caught than taught, so the act of volunteering as a family allows all generations to experience generosity.”  

Ultimately, giving is about doing good in the world. But it’s also important to feel good about the impact you’re having. “People give because philanthropy is joyous,” Harris says. “People want more joy in their lives.” That starts with making sure you’re giving efficiently and meaningfully.

Learn more about Philanthropic Services from U.S. Bank.