19 December 2018
Incorporating charitable giving and volunteering into daily life can be a great way to bring positives to both you and your community at large. This article will discuss the benefits of charitable giving, both for well-being and taxes, as well as encourage you to do your research on how best to incorporate giving into your family traditions.
The simple fact of it is, giving makes us feel good. It may be hard to believe, what with the 24-hour news cycles and bleak news feeds, but kindness and generosity beget more kindness. Humans are social animals, and as such, learned long ago that helping one another, using sympathy and empathy to understand outside experiences, and sharing helped everyone in the group. Success means little if there is no one to share it with after all. In fact, giving can be more pleasurable than receiving and that good feeling can help us to manage our more selfish impulses. Practicing generosity and kindness can improve relationships, at work and in life. Giving lights up the pleasure centers in our brain, leaving us with a feeling of satisfaction. Studies show that generous people tend to have better health. There are also data that shows altruism may improve life expectancy.
Giving can also get you a nice contribution deduction on your taxes. In fact, 37 million taxpayers took advantage of it in 2016. The average donation was $5,508. Donations do not have to solely be financial, as you can deduct clothing, furniture, volunteer expenses, even your old car to charity. Remember to always get a receipt of any donation for your records. Any larger non-cash donations (like a vehicle) will need a certified appraisal as well. You can also donate investments, like stocks, to avoid a capital gains tax. There are real tax advantages for higher earners to look into non-cash donations. Individuals over 70 ½ may donate up to 100,000 directly from their IRA without it being considered taxable income.
The new tax laws effective for 2018 have changed the charitable tax deductions for some people depending on whether or not they itemize. Financial and tax advisors are recommending different strategies for some of their clients who itemized in the past and now will take the standard deduction. Deduction-bunching and using a Donor-advised fund is a way for some people to deduct their charitable donations in years they may not otherwise.
Unfortunately, there are a lot of scams and less than great charities out there. For that reason, it is very important to do your research and make sure that you are donating to a reputable charity. If you are just getting started, a good first step is to think about your values and what you feel strongly about. Are you a nature lover? An advocate for animals? The poor? It is recommended you only donate to organizations that are tax-exempt, nonprofits under section 501(c)(3). The IRS offers a Tax-Exempt Organization Search, which you can search to verify. Other good tips are avoiding donating in cash and always getting a receipt for your donation. Some groups may benefit from time or expertise over money, so never feel the only way to be charitable is giving cash. Especially for someone newly retired, you may have a variety of valuable skills and the beauty of time to offer, which can sometimes be as valuable to a non-profit or organization. No matter what the cause, doing a little research can help maximize your donation and make sure it gets put to the best use.
Beyond the personal health and happiness benefits of charity, there lies an even greater gift. It is the inheritable gift of generosity. Teaching through action is one of the best ways to pass along your values to your children and their children. Creating a culture of gratitude and charity, where help is given, to enrich lives and improve the community, is perhaps one of the most wonderful gifts to give your family. It can start small, for example having your children sort through old toys and clothes and donating them to charity. Helping in shelters, senior centers, neighborhood cleanups, volunteering time within your community imparts the knowledge that they are part of something bigger and have something to offer others. So much of a generous life is just thinking about others and outside of yourself, the first step is seeing the world as bigger than your small pocket of it.
There are so many good reasons to practice charitable giving, from the personal benefits of mental and physical health to the improved external relationships at work and home. There are also the tax benefits that can help offset hefty tax bills. Perhaps most important are multi-generational traditions created that promote civic-mindedness and kindness. With so many good reasons to donate, it’s no wonder that nearly 96% of American adults report giving to some sort of charity.