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Develop a Charitable Giving Plan

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Charitable giving brings benefits both to the giver and the recipient. If you want this benefit to last, one of the best things you can do is create a charitable giving plan. Such a plan is not just for those with a lot of spare income; a charitable giving plan is a good idea for anyone who wants to make the most of their donations.

Here are four steps to create your charitable giving plan at any income level.

1. Identify Your Goals

The reasons for giving to charitable endeavors vary more than most people realize. Take out a pen and spend a few moments writing down three or four main interests you have. Then, write down why you give and what you want your money to accomplish. The result will give you direction. 

You may be a spur-of-the-moment giver, wanting to be free to donate when the feeling and desire hits. Or you may be one to give a lot of thought as to how you can make the most difference.

Do you want to give anonymously or would you like recognition for your good acts? What types of charities motivate you the most? Is it children's charities, efforts to save the environment, or perhaps educational work? These questions will help you find what you are passionate about.

2. Choose Charities

The reason that it's important to quantify what your goals and motivations are is to help you narrow down the incredibly large field of possible recipients. Most people can't give to every needy organization, so a little bit of research will help you direct your money where you want it most.

Use your goal list to find a selection of possible charity recipients, then do some investigation about their organizations. Steer clear of fly-by-night operations and look for charities with solid track records. A number of charity tracking sites exist on the internet to help you learn how charities use their donations, what portion goes toward the work, and what complaints they've had.

If the charities are local or have facilities nearby, consider visiting them and talking to people yourself. 

3. Decide on Methods

After you determine which charities you want to give to, decide how you'll give. Making a donation right now gives you an immediate impact and helps reduce your tax liability in the current year. But arranging for a donation through your estate when you pass away can be a larger tax benefit. In fact, giving from your life insurance could allow you to give a larger amount than you otherwise would have. 

If you want to make sure you can see the fruits of your charity, retirement accounts - such as a traditional IRA - generally allow you to make tax-free donations directly from your accounts after the age of 70 1/2. Gifting assets could help you avoid tax liabilities while keeping liquid cash available for your own use. 

If any donations will be significant, speak with an experienced tax accountant or tax attorney before executing your arrangement. They can help you run the numbers to decide how to maximize your giving.  

4. Write It Down

Now that you've decided on recipients, amounts, and a timetable, put it all in writing. For small amount donations, documentation could help you stay on track with your plan. Future giving could entail a simple written understanding between you and a spouse or responsible family member. Or it could mean talking with your heirs about your giving plans.

If you plan to donate from your estate or insurance money, work with your attorney and executor to place it legally in your instructions. 

Start formulating your charitable giving plan today by visiting the legal and accounting experts at Coffman, DeFries & Nothern, P.A., today. 

Coffman, DeFries & Nothern, P.A.

534 S. Kansas Ave., Suite 925
​Topeka, KS 66603
Phone:  785-234-3461
Fax: 785-234-3363