– Everyone believes in a good cause. Especially now when individuals and organizations are struggling after the ongoing coronavirus pandemic. People want to support causes that are important to them, be it through volunteering, donating goods or services or through a financial contribution.
The ability to make a financial contribution to a cause that is important to you will likely vary throughout your life. As a younger person starting out, your financial resources may be more limited or spread out across areas such as buying a home, student loan, starting a business, or starting a family.
The financial planner profession recognizes that people want to support organizations that matter to them without jeopardizing other financial goals such as debt repayment or retirement planning.
The CFP Board, a non-profit organization dedicated to supporting professional standards in personal financial planning, can help individuals assess their financial condition and plan how much they can budget for charity.
“A CFP professional can help you clarify your financial goals and determine which donation options are best suited to meet your goals,” said Marguerita Cheng, CFP®, a CFP board ambassador.
Some factors to consider when planning are that your personal situation comes first. Don’t exchange your regular monthly expenses for housing, loans, or other important items and then give money to charity.
Other tips to get the most out of your charity donation:
– Maximize your money. Some employers agree to donate to charity. When writing a check directly to a charity, you can deduct the full amount from payment to attend a fundraiser. Do your research and find out what percentage of donations directly support the organization’s mission.
– Stick to your plan. It’s easy to break a budget for charity, especially during troubled times when everyone is asking for help. Prioritize, choose your favorite organizations and send your money there instead of spreading your money thinly. Also, consider whether monthly or annual contributions make sense depending on the consistency of your income.
– Think outside the checkbook. You don’t have to give up on your regular salary to make an impact. If you have an interest or skill that you can use as a side business, donate those profits. Sell time in a vacation home when you aren’t using it and donate the money.
Visit letmakeaplan.org for more information about the CFB board, tips and advice on how to incorporate charitable giving into your financial planning strategy.