A Guide to Giving Back – 4 Insights to Maximize Your Contributions

Dec 3, 2024

Group of people giving back by packing supplies

Giving back may seem driven by sentimentality, but for purpose-driven and generosity-minded people, it can also be serious, strategic, and systematic. At Credent, we believe giving back is a significant part of a financial plan.

At the time of this article’s release (December 3rd, 2024), it is GivingTuesday, “a day that encourages people to do good.”¹ In the wake of holiday shopping, GivingTuesday is a day for giving back, being charitable, and focusing on others.

The skeptics among us may assume the day is more talk than tangible outcomes. On the contrary, the GivingTuesday website reports that “[t]he movement continues to grow in year-over-year donation volume, reach and impact — driving increased donations and behavior change. In 2022, an estimated $3.1 Billion were donated in twenty-four hours in the U.S. alone, a 15% increase over the prior year and a 25% increase since 2020.”²

Giving back is at the heart of some foundational questions we ask clients when building their financial plans. A day like GivingTuesday creates an opportunity to highlight strategies to maximize and personalize your giving — strategies you may not hear about elsewhere.

Here are four insights in our guide to giving back.

1. Elevate your giving with help from a financial professional

When it comes to giving back, you may have more options than you think. Financial advisors can walk you through basic giving tactics, but they can also help you execute strategies above and beyond your usual methods.

For example, some unique alternatives we’ve covered on the blog include:

- Giving stocks
- Giving real estate
- Donor-advised funds
- Giving some or all of your required minimum distribution
- Creating a private foundation

Not all of these will work for everyone, but an advisor can introduce you to approaches that make sense for you while considering how to optimize timing and minimize taxes.

Financial professionals can also help you elevate your giving by building it into your financial plan. When it comes to giving, planning isn’t necessarily the norm. The GivingTuesday website notes that “[i]n Q3 and throughout the year, spontaneous giving is consistently more popular overall…Looking at trends over the past year, spontaneous giving was consistently prominent throughout Q4 2023 and Q1 2024, at 61% of overall giving in Q4.”³

As advisors who love a good financial plan, we support giving with forethought. That’s why, at the start of our client relationships, we ask people if there is a particular institution — a church, a school, a charity — that means a great deal to them and to which they would like to leave a meaningful legacy. We want to know this upfront and build it into the plan.

If you plan your giving, you won’t just satisfy your Type A advisors. You may also give back better.

The GivingTuesday organization notes how “[p]re-planned givers are more likely to engage multiple ways and more intensely (i.e., donating higher dollar values) when they give.”⁴

2. Be intentional with giving back to loved ones

You may think helping your loved ones is just the give-and-take rhythm of relationships, not a form of charitable giving or “giving back.” However, being intentional with this kind of support in the same way you are thoughtful about other types of giving can help you and your loved ones fare better in the long run. On GivingTuesday, create a tradition to review all kinds of giving habits.

To get started, consider these three questions we ask when building and reviewing our clients’ financial plans:

- To what extent do you want to intervene in the financial lives of your children, either during your lifetime or as a legacy to them?
- Do you want to be — or need to be — financially involved in your grandchildren’s education?
- Do you expect to become financially responsible for your parents at some point?
- Do you wish to leave a legacy to your family?

The answer to any or all of these questions can be that you don’t intend to provide financial support to loved ones — and that’s okay! You decide how you allocate your resources.

If, however, there is something you want to do, you have options, and your financial advisor can help you understand, plan for, and optimize this kind of giving.

Giving back to loved ones might include considerations such as:

1. Clarifying estate planning confusions, such as not knowing how much to leave behind, the difference between wills and trusts, and whether you should update your will.
2. Creating a trust. (And acknowledging situations that may require a specific kind of trust, such as a special needs trust.)
3. Opening or contributing to a 529 account for a loved one (and first asking whether you are in a place where you can prioritize saving for a family member’s education).
4. Ensuring you’re not committing any estate planning mistakes.
5. Helping your kids and grandkids develop a healthy relationship with money and setting them up to succeed financially.

3. Recognize that even non-monetary gifts have a financial foundation

The GivingTuesday organization is clear about something we all know to be true — giving back does not have to be monetary.

On their Generosity Toolbox ⁵ page and list of 50 Acts of Kindness,⁶ they share ideas, including:

- Bring casseroles to neighbors in need
- Collect goods for your neighborhood
- Create a community pantry for pets
- Pay for the coffee or meal of the person behind you in line at a cafe or restaurant
- Leave a basket of essentials on the doorstep of someone who could use some support
- Offer to pick up groceries for a neighbor who might need help

If you are in a season where donating money is not a financial goal, it’s important to remember that giving is layered. Even still, while not all gifts are monetary, we believe most giving is financial at its core.

At Credent, we care about what you care about. If you want to spend more time giving in whatever way is meaningful to you — monetary or otherwise — we want to help you do that. Your finances are foundational to making that possible, giving you the freedom to spend more time and energy giving back.

For example, we’ve had clients use their financial freedom to:

- Volunteer at a camp that supports a cause they’re passionate about
- Put their skills to use helping people in underserved populations
- Support an ailing child

Our advisors don’t just care about your monetary gifts. We also want to help you give back with your time and lifestyle choices, and we believe your financial plan and portfolio can help you do that.

4. Give thoughtfully and carefully

When we talk about giving back, we have to talk about how to give thoughtfully and carefully in order to protect yourself.

Both types of giving we addressed, giving to charities and giving to loved ones, carry risks.

Giving to Loved Ones

As we discuss in our article on how to help your children develop a healthy relationship with money, when a family member or friend asks for financial help, there is a difference between an acute need and a chronic, ongoing condition.

In that article, Wealth Manager Steve Swicegood addressed three things to think about when helping someone out of a tough money situation:

1. Measure the impact of covering the emergency on your current financial plan.
2. Discuss the expectations around paying back any short-term loans.
3. Talk about the impact on family dynamics if a loan isn’t repaid.

It’s also important to face the truth of chronic situations — giving can quickly morph into enabling if you don’t set proper boundaries. You aren’t helping anyone if you keep giving in circumstances where money isn’t the true problem.

Similarly, when building your estate plan, it’s important to acknowledge when it’s best to split your will unequally, even between your kids.

Giving to Charity

The Federal Trade Commission, IRS, and FBI all share resources, warnings, and tips around giving carefully to avoid a charity scam.

Below, we’ve curated their insights and compiled them into a list dubbed “The 5 Gs of Giving Back.”

1. Always have your guard up

You don’t need to be fearful, but we do encourage discernment when doing anything digital, including charitable giving. Consider these tips and insights:

- - “Charity fraud scams can come to you in many forms: emails, social media posts, crowdfunding platforms, cold calls, etc.”⁷
  - “Fake charity promoters may use emails, fake websites, or alter or ‘spoof’ their caller ID to make it look like a real charity is calling to solicit donations.”⁸
  - “If you’re donating online, make sure the webpage where you enter your payment information has ‘https’ in the web address. That means your information is encrypted and transmitted securely. But encryption alone doesn’t mean the site is legit. Scammers know how to encrypt, too.”⁹
  - “Practice good cyber hygiene:
    - Don’t click links or open email attachments from someone you don’t know.
    - Manually type out links instead of clicking on them.
    - Don’t provide any personal information in response to an email, robocall, or robotext.
    - Check the website’s address — most legitimate charity organization websites use .org, not .com.”¹⁰

No matter what you’re engaging with — checking your emails, scrolling Facebook, answering the phone, browsing the internet — keep your guard up. Scammers are not discriminating on the channels they use.

2. Create a game plan

Experts agree with us that a proper plan is wise: “Doing some research and planning your giving can help ensure your donations get where they’ll do good.”¹¹

Planning your giving with an advisor can prevent you from searching for things to donate to, shutting down the possibility of running into a scam. If anyone asks, you can tell them, “My giving is all planned out for the year.”

In addition, collaborate with your advisor to plan how you will handle a financial scam before, during, and after the incident. Keep a list of pointers near your phone or computer to help you remember the signs of a scam and give you talking points to shut down a conversation with a potential scammer.

3. Go further

This is a cornerstone of giving — go further to understand what you’re giving to. Consider these tips and resources:

- “Take your time. Don’t trust your caller ID. Scammers use technology to make any name or number appear on caller ID. Tell callers to send you information by mail. Do some research. Is the charity real? If callers ask you for cash, gift cards, cryptocurrency, or a wire transfer, it’s a scam.”¹²
- “Potential donors should ask the fundraiser for the charity’s exact name, website and mailing address so they can independently confirm the information.”¹³
- “If the fundraiser says you already pledged, stop and check. They may lie and say — in a phone call or a mailer — that you already pledged to make the donation, [sic] or that you donated to them last year. They think that means you’ll be more willing to donate.”¹⁴
- “Those who wish to make donations should use the Tax-Exempt Organization Search (TEOS) tool on IRS.gov to help find or verify qualified, legitimate charities. With the TEOS, people can:
  - Verify the legitimacy of a charity
  - Check its eligibility to receive tax-deductible charitable contributions
  - Search for information about an organization’s tax-exempt status and filings.”¹⁵
- “Use one of these organizations that help you research charities:
  - BBB Wise Giving Alliance
  - Charity Navigator
  - CharityWatch
  - Candid”¹⁶

Exercising discernment can seem exasperating at best or disruptive at worst, but it won’t be as disruptive as dealing with the aftermath of giving to the wrong thing.

4. Get help

As much as possible, keep others in the loop regarding your giving. If you don’t want to disclose your charitable intentions to someone close to you, reach out to your advisor.

If you’re dealing with a situation that seems off, ask a trusted person for their input. Your advisors are prepared to catch financial scams and might notice something you missed.

If you think you’ve been targeted by a scammer or are a victim of a scam, tell someone as soon as possible.

5. Have grace with yourself

If you engage with a charitable scam, remember that you are not the only one who has ever done so — far from it! It doesn’t make you dumb, less of a person, or any other lie you may be tempted to tell yourself. Scammers are skilled at creating confusion.

It does no good to beat yourself up about the situation — have grace with yourself, ask for help, remedy what you can, and remember these tips for the next time a scammer comes calling.