Certified financial planner Wes Moss provides personal finance advice and accessible investment strategies. His guest post appears here weekly.
Georgians are incredibly generous. We give about $4.8 billion to charity every year. While much of that comes from major philanthropists and foundations, state residents give an average of $3,396 a year to worthy causes. That’s an average of 6.2 percent of our discretionary income — comparing very favorably with the 3.2 percent national average.
Giving makes us feel good — like we’re part of something bigger than ourselves, something that might outlast us. For wealthy families, giving can also be an important part of tax and estate planning strategy.
Making a smart charitable contribution is a lot like planning for retirement. Some tips from Georgia-based philanthropic advisor Eileen Snow Price:
• Clarify your values: What causes and issues are important to you. Who do you want to help? What type of organization is best suited to administer that help? A church group? National charity? Local? Be specific.
• Know your limits: Figure out how much you can really afford to donate. NetworkforGood’s calculator can help you settle on an amount.
• Share more than money: There are three ways to support your favorite cause: money, time and wisdom. If you really want to make an impact and feel good about your efforts, give at least two of these things to your chosen charity.
• Screen for best value: Sites like CharityNavigator and CharityWatch provide efficiency ratings and background on hundreds of charities, (though one must be a paid member to access CharityWatch’s ratings). Look closely at an organization’s program expenses — the higher this percentage, the better. A charity that spends 70 percent on program expenses is spending 30 percent of your donation on overhead and fundraising expenses. A charity with a 98.5 percent ratio for program expenses is doing a fantastic job of converting donations into action.
If you are considering an extremely large donation — the bulk of your estate, for example — consider hiring a philanthropic advisor, someone like Price who gives away money professionally.
• Stay the course: Once you find the right charity, stick with it. Commit to supporting the cause on a continuing basis. Think of it as an investment, not a gift. Be patient and you’ll see that investment pay all sorts of dividends for both the community — and you.
What other guidelines would you suggest?
– Wes Moss, for AJC Atlanta Bargain Hunter blog