How does charitable giving fit into your financial plan?

Or maybe I should say – DOES it?

For most of us, financial planning is an exercise allocating scarce resources. None of my clients say, “Stephanie, I just have too darn much money! What should I do with it?” Wouldn’t that be nice! Instead, the usual predicament is many competing needs and wants – present-day, near-term, far-future, and maybe-someday – vying for our dollars.

Women in particular hold the fear of running out of money and becoming a burden on their families. So if we are dealing with that uncertainty, and worrying that we might not have enough for ourselves, how can we get comfortable with giving some of our money away?


How charitable each of us decides to be is completely an individual decision. But let’s look for a moment at how giving to others can actually benefit us.

It’s perfectly OK to be selfish about your giving – to ask, “what’s in it for me?” Men seem to be good at this, writing checks in order to get positions on boards or put their names on buildings. Women tend to shy away from this quid-pro-quo idea – but it’s how the world works.

What are the potential benefits of charitable giving? There is certainly pride in making an impact and the satisfaction of aligning our dollars with our values. There can be family bonding and constructive money conversations if you choose to involve others in the process. Learning opportunities are possible, as is interaction with the beneficiaries of your generosity. And there is the health impact of meeting new people, staying involved, and thinking about others, all of which studies have connected to greater happiness and longer lives.

Let’s be frank – it’s not just about giving money. It can be about getting a seat at the table. Serving on committees and boards give you a bigger voice in the direction of an organization, provide the opportunity to develop your skills like leadership and persuasion, and prove that more women deserve to be there!

And really, wouldn’t we all be better off if more women were in positions of influence?


So that’s all well and good – yes, it’s lovely to give away some money. But it doesn’t solve our main problem about not knowing if we’ll have enough.

Here’s what I have learned in my 21 years in this profession: financial planning is all about making guesses. Hopefully educated, well-informed guesses, but guesses nonetheless. Sadly, my crystal ball is in the repair shop, so I can’t tell you (and neither can anyone else):

What will inflation do?
Will Social Security rules and benefits change?
What do the investment markets have in store?

And the biggest question of all:

How long will you need your money to last?

With all those unknowns, how can you feel comfortable being philanthropic? How can you be sure that giving some of your money away won’t put you at greater risk?

The short answer is, you can’t be sure of anything. But that fact should not paralyze us.

You can take steps to mitigate uncertainty. You can weigh actions to control for potentially devastating outcomes. You can research and plan and consider. And then you need to go out and live your life.

Much like the dilemma of parents sending their kids out to play – should we wrap them in layers of bubble wrap and try to protect them from the world? Or do we send them out to experience and learn and scrape their knee or break a bone or two?

We can’t let fear stop us from taking action, making an impact, and expressing our voices.


So how can you be smart about giving? How can you maximize the impact of your gifts, recognize some real benefits for yourself, and address your financial anxiety and risks at the same time? Here are a few ideas for you.

Caveat, and no surprise given what I do for a living – I firmly believe in the value of comprehensive financial planning. Just like exercise programs tell you to consult a doctor before beginning, I advise that you look at your whole financial picture, in conjunction with your life partner if applicable, and with professional assistance if possible, before making any significant financial commitment!


There are several methods to increase your impact that don’t cost a single dollar today.

Add up all your charitable gifts last year. What if instead of giving many small gifts to a lot of different organizations and causes, you gave that total amount to one group? Could you have a larger impact? Would you be considered a significant donor? Might you be invited to special events where you could learn, meet people with similar interests, and have a great time? Many groups draw their board members from active donors – leadership opportunities abound!

TIP – Practice this line for when others come asking. “I’ve actually committed my full philanthropic budget for this year to an amazing organization I’m really passionate about. Would you like to hear about it?”

Review your beneficiary designations. Remember, things like 401(k)’s, IRA’s and life insurance do not pass through your will. They go to whomever you have named as beneficiary. You could name your favorite charity to receive part of the benefit. How much is totally up to you – 5%? 25%? Even 100% if there are plenty of other assets for your family? Remember you can always change your beneficiary designations as your life situation evolves.

TIP – You should review your beneficiary designations annually to be sure you’re up to date with your current intentions. Don’t forget life insurance you may have through work!


Taxes are a real factor in our financial lives. And the government incents charitable giving with certain tax benefits. True, as of 2018 the standard deduction as gone up to $24,000 for a married couple, so fewer of us will be itemizing on our tax returns. This means everyday gifts may not be deductible (more on that in the WHEN TO GIVE section below). Nevertheless, there are ways we can be smart about WHAT to give.

In all the talk about the new income tax rules, don’t lose sight of capital gains taxes. When you sell an asset that has appreciated in value, for example stock in a company, you likely will owe capital gains taxes. Instead of writing a check, you can often donate some of the actual shares of stock to the charity. Because it is a tax-exempt organization they will not owe tax on the sale – and you won’t either. So, in effect, you get a discount on your gift!

TIP – Be sure you know the cost basis of the assets you own. It should appear on your regular statements, but if you’ve owned it long enough or it was inherited, you may have to dig deeper to find the information.

Retirement plans are most commonly tax-deferred, meaning you owe income tax when you take distributions. (Note: there are many types of plans with various complicated rules. Check the rules on your specific plans.) At your death, whomever inherits the retirement plan money will owe income tax on it. Unless they’re a tax-exempt entity. So if you’re planning to make a gift at your passing, it’s more tax-efficient to leave life insurance proceeds to family and retirement plan assets to charities.

TIP – If you name a charity as beneficiary, let them know. It’s called a “planned gift,” which means it will happen sometime in the future. Many groups will recognize a planned gift in the present day and include you in their donor recognitions.

We had a call from a client recently about an old life insurance policy her father had purchased for her when she was a kid. She didn’t feel the moderate-size death benefit would make a big difference to her children’s lives. After some conversation, she decided to gift the actual policy to her favorite non-profit. This gave her a current tax deduction, and if she pays the ongoing premiums, which are low because she was so young when the policy was purchased, she could get deductions for those, too.

TIP – Be sure to coordinate with the charity if you choose to go down this route. Some may be more willing than others to take on ownership of an insurance policy.


There are ways to be strategic about the timing of your gifts as well.

If because of the new tax law you can no longer itemize deductions, you could choose to “bunch” your giving. You could make a larger gift in one particular year to get you other the threshold to deduction. Or another interesting strategy is to set up a donor advised fund (DAF). In this structure, you put money into a DAF and get a deduction for the full amount in that year. But then the DAF can spread the actual donations to charity over several years going forward. (Always consult your professional tax preparer about your specific situation!)

TIP – remember that charitable gifts must be given in the calendar year you wish to deduct them, whereas you may not have your full tax picture until your return is prepared. So a certain amount of guessing may be needed.

Be opportunistic about the timing of your gifts. You may face years when your tax bill is larger than normal. Maybe you have a capital gain from the sale of investments or a home. Or you have a great income year with a large bonus or a severance package. Take that opportunity to make a gift. It will not negate the tax you owe, but it can soften the blow.

TIP – If you own a business or are self-employed, your income can vary substantially year to year. Be prepared with a plan so when the big income years hit, you know where you’d like to give.

When you turn 70 ½, the IRS requires you to take withdrawals out of your retirement plans – IRA’s and usually 401(k)’s and 403(b)’s. Unless you have Roth money, this will be an income-taxable event. A few years ago the Qualified Charitable Distribution was introduced, which says if you have your withdrawal go directly to a charity, it will count as your required distribution, and that amount will not be counted as taxable income. In fact, you and your spouse can each donate up to $100,000 per year this way! This is another example of using the right dollars, and potentially reducing your tax bill even if you cannot itemize your deductions.

TIP – The rules are very specific, so consult a professional.

If giving is important to you, be sure to let all your professional advisors know, and remind them yearly so they can help you find the most efficient ways of achieving your goals.

As always, do the planning! Run your numbers. Look at what you’ve got and what you want to do, and make informed decisions!

Duke’s Office of Gift Planning encourages you to consult with your financial advisor to discuss how charitable giving might fit into your financial plan.

TAGS: Charitable giving Financial planning Ways to give

About the author

Gift Planning

Duke University’s Office of Gift Planning specializes in charitable gift planning for estates, charitable trusts and annuities, and other complex current and future gift plans.

For more information, please contact the Duke University Office of Gift Planning at 919-681-0464 or