How to Give Smarter with a Charitable Giving Strategy

With Bill Schnepp, Financial Consultant,
Bank Mutual

With the holidays in full swing, you’ve probably giving a lot of thought to, well, giving. As you’re thinking about the perfect gifts for loved ones, it’s also a great time to take a look at how you’re giving to the causes you care about.

In 2015, Americans set a new record for charitable giving with more than $370 billion – that’s about 2% of the US GDP. From spare change dropped in one of those ubiquitous red buckets to planning your estate to ensure your philanthropic legacy, how you give can be just as nuanced as why you choose to give. The key is to have a charitable giving strategy that works for your budget and goals, as well as your personal values.

So where do you start?

Know Your Values

Charitable giving isn’t just a financial transaction; giving is a statement, a reflection on what’s important to you. Whatever the amount and whatever the vehicle you choose, you need to have an idea of what you want to accomplish with your donation. Do you want to help end hunger? Are you passionate about animal welfare? Will your impact be local or international?

Know Your Finances

So you’re determined to give, huh? Excellent! A great place to start is with a financial advisor, like myself. They’ll help you get a good grasp on where your finances currently are and what your financial goals are going forward. From there, you’ll have an idea of how much you can afford to give and what giving vehicles make the most sense for your situation. They may also refer you to an estate planning attorney or a tax specialist to help you get the most bang for your philanthropic buck.

Know Your Options

Most charitable gifts are made through direct giving (think that monthly paycheck deduction for the United Way or the bags of used clothing you give to the Easter Seals). It’s basically you, as a donor, choosing what and when and where you want to give and, in return, getting a full tax deduction based on fair market value. That’s a common strategy in and of itself.

However, when you’re looking at large sums of money or, perhaps, a charitable legacy that will extend beyond your life, other giving vehicles may make more sense. The main variables to keep in mind are cost, control, agility, benefit and anonymity – and what balance of these variables are you willing to accept.

  • Costs – How much are you willing to or can you afford to spend beyond your original donation goal on startup costs and giving vehicle maintenance?
  • Control – How important is it to you to have oversight over your giving, knowing that, oftentimes, more control means more administrative responsibility?
  • Agility – Do you want to concentrate your giving efforts into one area or would you prefer to spread the proverbial wealth?
  • Benefit – How willing are you to compromise on some of the other options in order to maximize your tax benefit?
  • Anonymity – Is it important to you that your philanthropic efforts are recognized, or would you prefer to maintain your anonymity?

Customize Your Giving Vehicle

Apart from the previously mentioned direct giving strategy, there are many giving vehicles available to you. An estate-planning attorney can help you choose one in effort to accomplish your philanthropic goals.

Some popular options include:

Charitable Gift Annuities – This planned giving strategy strives to ensure a charity receives a steady stream of cash or property for the donor’s lifetime. After which, the charity receives the remainder of the fund. It’s suitable for people who still receive an income and wish to support only one charity – like a community foundation or alumni association.

Charitable Remainder Trust – With this vehicle, a donor transfers assets into an irrevocable trust, removing it from their taxable estate. This reduces the donor’s income taxes while living and estate taxes after death, and helps support one or more charities for the lifetime of the trust. It’s best for people who wish to receive an income while fulfilling their charitable goals even after their deaths.

Donor-Advised Fund – This philanthropic vehicle is restricted to issuing grants to 501(c)(3) charities, but allows for investment of funds for tax-free growth. It allows people to consolidate their giving for maximum tax impact.

Private Foundation – This nonprofit organization serves to fund the missions of outside charities through an initial endowment, often from a single donor. Startup costs typically run upwards of $15,000 but are perfect for people who want maximum control over their giving while living and managed control over funds after their death.

Give Smarter. Give Better.

Whatever your reason for giving, a charitable giving strategy is the cornerstone of smart philanthropy. With a strategic giving plan, not only are the causes that are nearest and dearest to your heart supported, but your long-term financial goals are supported, as well. Like any good financial strategy, the key is to understanding your finances, knowing what’s important to you, and finding the right people who can help make it happen.


Securities and advisory services offered through LPL Financial. Member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates. The investment products sold through LPL Financial are not insured Bank Mutual deposits and are not FDIC insured. These products are not obligations of Bank Mutual and are not endorsed, recommended or guaranteed by Bank Mutual or any government agency. The value of the investment may fluctuate, the return on the investment is not guaranteed, and loss of principal is possible. Bank Mutual and Mutual Financial Group are not registered brokers/dealers and are not affiliated with LPL Financial.

The LPL Financial Registered Representatives associated with this site may only discuss and/or transact securities business with residents of the following states: Wisconsin and Minnesota.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.

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