How Do You Handle Charitable Giving?

[Golden sunsets]

By that I mean;

1) Do you have a budget?
2) How do you decide individual amounts to give to each recipient?
3) If married do you share the budget equally with your SO?
4) Have you set up a Donor Advised Fund?
5) Do you vet the recipient organizations?
6) Do you give anonymously?
7) Do your recipients vary from year to year?

Here is how we finally decided to handle this expense category, but I'm open to improving our method. For years and years we always gave in a haphazard manner, with no particular pattern or goal, except for our religious giving sub category. I finally acknowledged to myself and admitted to DH that I found that the constant requests by phone, door to door solicitation and mailings really annoyed me. And that fact made me feel bad about myself. We gave but I was first annoyed and then experienced self loathing. Plus, DH's giving priorities and my own we're not necessarily aligned.

As we got closer to retirement, my work commitments tapered off and I had more time to devote to budgeting and planning. What we decided to do is set up a giving budget (which we systematically increase each year) and mentally divide this budget in two, one half for me to allocate and the other half for DH. I keep track of the giving on a spreadsheet and in fact we deposit money monthly into a sub account giving fund (along with other money for other irregular expenses). Most of our intentional giving occurs at the end of the year invariably as our charities for the most part start soliciting about this time of year. Part of the reason I like this approach is I feel free to ignore begging letters, or politely reject calls and door knocks for money, because I "have my own somewhat generous plan for giving" and no longer feel guilty for refusing. Plus I can vet any new recipient rather than responding on the spot. November is the big month. At the beginning of November DH and I each complete our list of recipients and amounts and I then go on a spending binge on line, credit card in hand, setting up the gift. Many of the recipients are the same from year to year, but there are inevitably one offs, some of which occurred earlier during the year and the amounts may vary.

The result has been, I am no longer plagued with self hatred, debates and negotiations with DH and actually feel good about our giving.

I'm interested in your method, dear FIRE members......


Sent from my iPad using Early Retirement Forum

 

[Gumby]

At the beginning of every year, the young wife and I together decide to whom and how much we will donate, and put that in the budget. The list has stayed relatively stable over time, although some recipients have been added to the list and some dropped over the 10+ years we have been doing it this way. In December, I write all the checks that we have listed.

With rare exception, we do not vary from that list over the course of the year. If someone not on the list calls, I tell them about the list and that we will consider their cause for addition to next next year's list, but that this year's is already set.

When considering a new addition to the list, we vet them by looking at Charity Navigator.

We don't make a special effort to remain anonymous (we do need a tax receipt after all), but I could not care less about the fancy printed acknowledgement brochures and such. They should just save their money.

 

[athena53]

Like the OP, I have a church pledge and then allocate a certain amount monthly from my budget to other charity giving. (I have a lot of "sub-accounts" in my checking account which I track with a spreadsheet and this is one of them.) When something comes up- a fund-raiser, someone I know doing an athletic event for a cause important to me, etc., I take it out of that allocation. I always zero it out by year-end. Plenty of worthwhile causes!

Individual amounts- typically $100-$200.

I do have a donor-advised fund, which I set up in 2012 when I received a signing bonus from and employer and wanted to reduce the tax burden. I rarely use it, but it's WONDERFUL for anonymous donations. I once sent a $1,000 donation to a well-known nonprofit and they not only put me on their mailing list, but they looked up my phone number and started calling. I've moved since and the calls have stopped, but now any donations to them come from the DAF, anonymously. Great way to get a legitimate tax deduction the year the money goes in, without giving away your identity to the recipient.

I'm widowed, so no spousal input. I like your 50-50 split, though.

 

[pb4uski]

At the beginning of every year, the young wife and I together decide to whom and how much we will donate, and put that in the budget. The list has stayed relatively stable over time, although some recipients have been added to the list and some dropped over the 10+ years we have been doing it this way. In December, I write all the checks that we have listed.

With rare exception, we do not vary from that list over the course of the year. If someone not on the list calls, I tell them about the list and that we will consider their cause for addition to next next year's list, but that this year's is already set.

When considering a new addition to the list, we vet them by looking at Charity Navigator.

We don't make a special effort to remain anonymous (we do need a tax receipt after all), but I could not care less about the fancy printed acknowledgement brochures and such. They should just save their money.

Gumby saved me a lot of typing, as our process is very similar... except make it old wife rather than young wife. We have a list that has been vetted through Charity Navigator that is pretty much the same from year-to-year... in fact, I have a spreadsheet from 2005 to 2017.

We give to ~25 different charities. Over the years I have tried, unsuccessfully, to winnow the list down to fewer charities and give more to each, but each one seems to have a connection with us.

The one great thing about the new tax act is that I'll no longer need to keep all those contribution acknowledgements because we will no longer be itemizing, so that should tame the paper tiger a little. I think we'll give the same in total even though we will no longer get a tax benefit since the tax benefit was a byproduct of our giving and the main purpose was to support these organizations good works.

 

[kaneohe]

...................................

The one great thing about the new tax act is that I'll no longer need to keep all those contribution acknowledgements because we will no longer be itemizing, so that should tame the paper tiger a little. I think we'll give the same in total even though we will no longer get a tax benefit since the tax benefit was a byproduct of our giving and the main purpose was to support these organizations good works.

When you become a real Sr. citizen,you can reverse those bolded statements
with QCDs.

 

[bingybear]

I have a DAF that I funded while working. We are more than a decade from RMDs so QCDs are far off too. I avoid pledging for any gifts as legally binding pledges can invalidate QCD and DAF gifting.
Now we use DAF for all gifting. I would expect that QCD's will be used after RMDs start.

We use Fidelity's Charitable Fund tools to vet potential charities as well as personally visiting or volunteering at local charities. We do not have a formal process for adding or removing charities from our list or changing amounts. So, I guess one would say we have an as hoc process.

 

[athena53]

I have a DAF that I funded while working. We are more than a decade from RMDs so QCDs are far off too. I avoid pledging for any gifts as legally binding pledges can invalidate QCD and DAF gifting.
Now we use DAF for all gifting. I would expect that QCD's will be used after RMDs start.

I'm a few years away, too, but could you elaborate on this? Are you saying that if I make a pledge to my church, I can't pay it via a QCD or DAF? Not sure what constitutes "legally binding", anyway; from what I've heard when I asked around, you're not expected to continue pledge payments if you move to another church, and I've never seen a church go after someone who didn't pay the amount they pledged but remained as a member (and I've been on the financial leadership side). Both of those factors would imply that a church pledge payment isn't legally binding.

 

[RunningBum]

https://www.fidelitycharitable.org/articles/making-pledge-donor-advised-fund.shtml

Why a pledge is off the table—and what to do instead
The Internal Revenue Code prohibits donor-advised fund grants from providing a “more than incidental benefit” to donors or related parties, which can trigger penalty taxes on donors and others, Young explained. Fidelity Charitable does not make grants that would relieve a donor's (or another party's) financial obligation, such as a legally enforceable pledge. But if you haven't made a legally binding commitment, you can certainly recommend a grant in support of your non-binding “pledge.” Simply select the category “Pledge (non-binding)” from the menu of options when you are recommending the grant, Young said. You will have the option to describe the purpose of the grant—in this case, to support your class reunion’s scholarship project.

 

[Golden sunsets]

I have not paid attention to the QCD method of giving until now. Thanks for bringing it up. DH turned 70.5 last year and the first RMD came out in 2017. We itemized last year and while I fully understand why reducing AGI is better than reducing taxable income I did not think it was worth looking into. Fast forward to this year. We will not be itemizing this year. I turn 70.5 next year. So my thinking is that if we pull all of the charitable money from DH's IRA and make the donations in his name only, we will be covered from the IRS perspective. Next year when we are both eligible for QCD's, we can split the amounts withdrawn and give individually in each of our names to our list of charities, which in some cases means that there would be two checks to the same charity for half of our gift.

I plan to check with our accountant, but if I am right about all of this, my remaining question is "Does our broker allow for my setting up withdrawals to numerous entities or is this more for one off larger donations"? If they do then our tax bracket including State will be 31.15% next year (29.15% this year) and the reduction to our tax bill would certainly be meaningful enough to go ahead and give this way starting this year. Any thoughts from you folks on this reasoning?

 

[RunningBum]

I set up a DAF last year, to offset a larger Roth conversion and since I don't expect to itemize deductions anymore. I generally keep contributions anonymous but I have a couple donations to small local groups like the volunteer fire dept and rescue squad in my name so they know I'm supporting them.

I have a pretty rough idea of a budget for the year but I've expanded it since setting up the DAF and I'm still kind of figuring out who all to include. I research with charity navigator.

 

[VanWinkle]

If you are 70.5 and taking RMDs, QCDs(Qualified Charitable Distributions) would seem to be the only way to go. I currently give to my church and several nature related charities. I also volunteer my time to 3 different organizations that help elderly low income people. I am 7 years from RMDs, but will then do all of my charity giving from RMDS to reduce the taxes and likely increase the giving.

 

[Souschef]

If you are 70.5 and taking RMDs, QCDs(Qualified Charitable Distributions) would seem to be the only way to go. I currently give to my church and several nature related charities. I also volunteer my time to 3 different organizations that help elderly low income people. I am 7 years from RMDs, but will then do all of my charity giving from RMDS to reduce the taxes and likely increase the giving.

Absolutely! I am well into RMD's, and for large donations I use QCD's. Every check I get from the brokerage has a stub indicating the institution or charity the money goes to.
Between state and federal tax, that saves me about 25%, so we both benefit.

 

[pb4uski]

Can you have a QCD go into a DAF and then be dispursed to qualifying charities?

 

[Golden sunsets]

Absolutely! I am well into RMD's, and for large donations I use QCD's. Every check I get from the brokerage has a stub indicating the institution or charity the money goes to.
Between state and federal tax, that saves me about 25%, so we both benefit.

Souschef; Is there a reason why you don't use QCD's for every contribution? What is the process that you use, when you do set these up? Is your broker set up to handle these requests routinely? I would think, now that many of us won't itemize any longer that brokerage IRA providers would be inundated with these sorts or requests, given the tax advantage.

 

[Golden sunsets]

Can you have a QCD go into a DAF and then be dispursed to qualifying charities?

I wondered the same thing.

 

[pb4uski]

I guess not.

Currently, QCDs cannot be made to donor-advised fund sponsors, private foundations and supporting organizations, though these are categorized as charities. NOTE: Donors should check before making a gift to ensure the organization is qualified to accept QCDs.

https://www.fidelitycharitable.org/philanthropy/qualified-charitable-distribution.shtml

 

[45th Birthday]

When I first sold my companies and FIREd, I set up a small foundation that has pretty much been depleted. As that got smaller, we started giving more directly to various charities. Last year, we put a bunch of appreciated stock in a DAF that we are starting to deplete. Larger gifts (over $1,000) come from the funds. Smaller gifts, one-off requests for walks, etc. are just paid ad hoc.

We do have a planned spending amount (as we do for every category of spending), but also like every category we don't get too concerned if we don't hit the number.

We don't do a lot of vetting. Most of our giving is to schools my wife or I or our children attended. Other giving is to community organizations and organizations where we are active or on the board. We always have several ongoing multi-year pledge gifts for capital campaigns, these range from mid-4 figures to low-5 figures a year.

We are still at least 10 years from RMDs, so haven't thought much about that. We do have 10% off the top from our estate going to a specified list of charities. The idea is to fund these gifts first with IRAs. Most likely, that will wipe all those accounts out and more.

 

[Golden sunsets]

I guess not.



https://www.fidelitycharitable.org/philanthropy/qualified-charitable-distribution.shtml

I'm not surprised, but was curious. I read in one article this morning that the QCD has to go directly from the IRA to the organization. The check can be sent to the donor, but must be made out to the entity and transmitted to them either directly or perhaps hand delivered.

On the other point, regarding " the organization must be set up to accept QCD's", other than being a 503(b), I wonder what an org has to do to be able to accept QCD's. I would think that they would all be running to their CFO's making sure that they are properly set up.

Unless I'm missing something here, this ability preserves the tax advantage (even enhances it) of charitable giving for those who no longer itemize and have reached 70.5, assuming they have IRA's. Setting up a DAF would be the other way, triggering "itemization" one year and then doling out the money over the next several years. I'm just trying to figure out if the QCD method is as practical and workable as it seems.

 

[bingybear]

I'm a few years away, too, but could you elaborate on this? Are you saying that if I make a pledge to my church, I can't pay it via a QCD or DAF? Not sure what constitutes "legally binding", anyway; from what I've heard when I asked around, you're not expected to continue pledge payments if you move to another church, and I've never seen a church go after someone who didn't pay the amount they pledged but remained as a member (and I've been on the financial leadership side). Both of those factors would imply that a church pledge payment isn't legally binding.

https://www.fidelitycharitable.org/articles/making-pledge-donor-advised-fund.shtml

RunnningBum got to it first. IIRC a pledge to a church is not legally binding as you have no legal requirement to pay it. However, there are other things to watch out for. If you give to a charity that holds an event for those who donated, part of the gift would likely not be allowed -- you'd have to pay tax on that part. Say part of your church donation paid for you to go on a mission trip, that would fail the "incidental" and be a problem. That you show up at church services would not be an issue as you could pay nothing and do that.

The issues usually arise if you specify conditions. Probably OK to identify the use for the church building fund. Likely not OK if a room or wing then becomes named for you.

I had one charity that was offering jackets, hats and other rewards based on gift level. I made it clear before I gave that I could not accept any of these for my gift. Some wanted to give them anyway and a lawyer who specializes in not for profits put her food down in my favor. You can't gain much of anything personally without affecting the contribution.

It really is not much different than contributing to charity before retirement. If you gave to charity and they gave you something, you had to subtract the value from your donation for tax filing.

 

[JoeWras]

Most of our giving is through Vanguard Charitable DAF. We plan one more big donation this year since we have income and other deductions (state tax, etc.) in our last year working. We also sometimes give smaller amounts by regular check or donate goods such as an old car.

Future years will be every 2 or 3 years in one big chunk to get over the deduction minimum for tax purposes. The DAF is then used continuously over those years to level out the big donation.

To keep things clear, with our church we don't sign anything and use VanChar's form for a future recommendation. I don't want to call anything a pledge just to be very clear. Other giving beyond the church is for organizations and causes as the need rises, through the DAF of course. VanChar gives you access to Guidestar, which allows a deep dive into the charity's purpose and finances.

 

[MarieIG]

1) Do you have a budget?

Very informal.

2) How do you decide individual amounts to give to each recipient?

Weekly amount to church; others yearly or on as needed basis.

3) If married do you share the budget equally with your SO?

No.

4) Have you set up a Donor Advised Fund?

No. May look into that in the future when and if I reach RMD age, but expecting a significant drop in income in the first few years of retirement, after which it will start to creep up.

5) Do you vet the recipient organizations?

Very briefly (other than disaster relief).

6) Do you give anonymously?

Sometimes, but mostly not.

7) Do your recipients vary from year to year? There are the usual, but if there is a particular circumstance (i.e. disaster) that may change for a particular year. Currently, there is an additional one I am considering adding to the list.

Basically they fall into these groups:

Church
Children
Vets
Animals
Disaster relief (varies and not pre-planned - try to check into these)

 

[GrayHare]

My donation approach is similar to those described by others. I also seek out small groups involved in what I deem worthy projects. Many of these groups amaze me at how poor they are at raising money, at times tempting me to volunteer assisting with their fundraising efforts. So far I've avoided that temptation. One thing is certain, if there is no expression of thanks, by that I mean a simple acknowledgement of the donation, the group gets no more money from me.

 

[RenoJay]

1) Do you have a budget?

I have a couple charities to whom I give consistent amounts every year that they can count on.

2) How do you decide individual amounts to give to each recipient?

I only give to local chapters of organizations to who meet the criteria of a) doing something I really believe in, b) have a personal connection to me in some way, c) are small enough to where my contribution will make a difference. In other words, I have no interest in giving $50 to fight cancer; I want to give $10,000 to a small organization where that's a significant sum.


3) If married do you share the budget equally with your SO?

N/A

4) Have you set up a Donor Advised Fund?

Yes...Vanguard charitable. It's a great way to sell stocks without paying cap gains.

5) Do you vet the recipient organizations?

Yes. I have a personal connection with each and look at how they spend money. Any organization with wasteful "visionaries" doesn't make the cut. I want frugal orgs who are doing good.

6) Do you give anonymously?

I should, but I guess my ego is too big for that.

7) Do your recipients vary from year to year?

They're pretty consistent. I'll give small donations for the neighbors' kids' jog-a-thons, cookie-sales, etc. but the big contributions are consistent so the organizations can count on them. (Plus you get really nice thank you notes!!)

 

[kaneohe]

....................... my remaining question is "Does our broker allow for my setting up withdrawals to numerous entities or is this more for one off larger donations"? If they do then our tax bracket including State will be 31.15% next year ......................

Might depend on the broker perhaps, but mine does my 15-20 or so checks to various orgs w/o a fuss and they're not huge amounts.

 

[gayl]

Editing to answer 1 at a time:

By that I mean;

1) Do you have a budget?

Sort of. It's $150 direct contribution per month, each Holyday / Thanksgiving food drive (Contract Costa Food Bank) / stuff the boot (fire dept) / adopt 1-2 families at Christmas (not my holiday but theirs)

2) How do you decide individual amounts to give to each recipient?

outside of monthly auto directed from bank account, it depends on what's there

3) If married do you share the budget equally with your SO?

single

4) Have you set up a Donor Advised Fund?

not yet

5) Do you vet the recipient organizations?

always

6) Do you give anonymously?

Well kinda hard. Easy when stuffing the boot, dropping into food barrel, adopt a family. Request to stay anonymous when contributing by check.

7) Do your recipients vary from year to year?

individuals = yes, organizations = no

I should look it QCD for synagogue & food bank when I hit RMD

According to above link: I give to SF Civic Symphony somewhere around $500-600 per year. Part ($100pp & 2-3 of us) offsets diner tickets (annual fundraiser) so that's not charity? Doesn't matter, they get it anyway