The Heart of Giving Part I: Meaningful Charitable Giving

Charitable Giving
SAGE Advisory Group:
Meaningful Charitable Giving

Earlier this year, we covered how charitable giving can be a win-win activity, bringing as much happiness to the donor as to the recipient. We believe this is true whether you’re giving gifts to loved ones or fulfilling philanthropic goals. But especially for the latter, the giving is best done intentionally as part of your greater financial life planning:

  1. Meaningful Giving – First and foremost, does the giving bring you joy?
  2. Effective Giving – Can you entrust the charitable organizations you’ve identified to make good use of your generosity?
  3. Efficient Giving – Are you making best use of available tax-efficiencies, so both you and your recipients can make the most of the dollars spent?

Good Giving Should Feel Good
Whether you’re giving a $10 box of chocolates or funding a $10 million foundation, we suggest you begin by heeding this “first of all” advice from no-nonsense advice columnist Carolyn Hax:

“Giving as a transaction isn’t giving. The only return on true giving is to feel good, and if you don’t feel good, then don’t do it.”

That’s not to say that the only reason to be charitable is to feel good about yourself. But you’re missing out on one of giving’s greatest gifts if it has become more like a lowly chore than an emotional high.

Planning for First Things First
If anyone knows what it takes to add meaning to his charitable intent, it would be Warren Buffett. He is not only among the world’s wealthiest, he’s also among its greatest philanthropists, having given away more than $3 billion in 2012 alone. So it’s worth heeding advice shared in this Forbes article, “Four Charitable Giving Tips from Warren Buffett.”

As the article states: “Start by clarifying what motivates you.” This mirrors another piece we read in The New York Times, identifying a mismatch between donors’ motivations and the financial advice they typically receive. Citing a report by US Trust, the article describes how donors are seeking help with assessing the impact their gifts might have and weighing various gifting options:

“When donors and financial advisers discuss philanthropic giving, it seems to resemble a John Gray book: one is from Mars, the other from Venus. Donors want to talk about their interests, while their advisers tend to talk about the various technical ways to make a donation, like giving appreciated stock.”

Giving Goals Call for Careful Questions
As advisors ourselves, we don’t espouse wholly ignoring the financial life planning component of your charitable intent. But we agree that it’s rarely if ever a donor’s first focus. Just as it’s critical to understand your financial goals before allocating your investments for achieving them, it’s important for you and your advisor to deeply understand your charitable goals before allocating your “giving budget” among the countless opportunities available.

Getting at these sorts of insights takes a different line of questioning than, “What is the estimated adjusted gross income for your upcoming tax return?” It takes questions like:

  • How do you feel about family and community?
  • What affiliations might guide your giving, such as religious or academic ties?
  • What causes are most important to you, such as women’s rights, climate change, education or global hunger?
  • Are you most interested in making an impact locally, nationally or globally?

By first considering your personal giving goals (for which there is never one right answer) and only then acting on them, you’re far more likely to end up as rich as Warren Buffett, at least as measured by personal satisfaction with your philanthropic pursuits.

Laser Pointer or Spray Paint?
Another important line of decision-making is how much should go to one or a few targeted recipients in larger batches, versus spreading your donations far and wide in smaller amounts.

The aforementioned New York Times piece (as well as this Wall Street Journal coverage) indicates that larger, targeted giving often yields the most satisfying results. Much like with investing, having a focus or goal for your giving gives you a clear benchmark to gauge how you’re doing. Then again, there’s something to be said for random acts of kindness – such as paying for someone’s meal at the drive-thru, as described in this recent New York Times piece.

How fun is that? As with most things in life, finding a balance between SAGE and serendipitous giving seems a sensible strategy.

Next Up: A Trip to Mars
Besides ensuring that their giving has personal meaning, most donors also would like their generosity to be effective for the cause they’ve identified and tax-efficient for themselves. In our next post, we’ll cover some of these “Mars” details. But don’t worry, we promise to make the trip worthwhile.


SAGE Serendipity: Not all giving has to be financial. When it’s a gift from the heart, it can be as simple as a Dr. Seuss children’s book, made special in a delightful way, as described in this Huffington Post piece: “An Incredible Graduation Gift from Dad.


Sheri Iannetta Cupo, CFP®, is Founding Principal of SAGE Advisory Group, based in Morristown, NJ, an independent, Fee-Only Registered Investment Advisory firm, specializing in providing busy professionals and their families with holistic financial life planning and investment management services. You can find more here: www.sageadvisorygroup.com where this post originally appeared. You can also connect with Sheri on Twitter, Google+ and LinkedIn.

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