How to Use Planned Giving as Part of Your Financial Plan

In many ways a personal financial plan is not complete unless it includes charitable giving. Planned giving is easy to learn and goes hand-in-hand with your personal budget.

Difficulty: Moderately Easy

Instructions

1. Develop a budget - Before giving money to any organization, you should create a personal budget. Just as you would include your monthly power bill in your budget, include a specific amount for charitable contributions. Many churches recommend that you tithe (which literally means a tenth). You should, however, set your own standard based upon your beliefs and ability to give. In many circumstances, giving 10% of your income may not be enough to satisfy you. Giving can become addicting.

2. Be Informed - Ask questions of your chosen charity. Determine how much of your gift will be used for administration costs and overhead versus the amount that will actually support the organization's mission.

3. Keep Detailed Records - For the most part, a canceled check will suffice for any gifts under $250. If you give an amount greater than $250, it is wise to obtain a receipt from the charity specifying the amount and description of the gift. Planned giving works best is you stay organized.

4. Understand the basic tax laws - While most qualified donations can be deducted from your Adjusted Gross Income (up to approximately 50% of your AGI), you need to be aware of anything that may affect the extent of the donation. If, for example, you receive a premium (dinner, shirt, etc) as a result of your donation, the amount of the donation that can be deducted from your AGI is reduced by the Fair Market Value of the premium received.

Tips & Warnings

• Budget your charitable contributions on a paycheck-to-paycheck basis. Giving frequently ensures that you do not spend the money earmarked for charity on something else.
• Chose your charity wisely - Determine what you are passionate about and give to those organizations that hold the same things in high regard.
• Ask to see a charitable organization's 990 tax form. If a company refuses to provide this information, look elsewhere for a place to donate your money. This form details the percentage of your donation that will directly be used to support the organization's mission.

Resources

• Chasing The Bull

[pianistic]

on 11/15/2008 Great!

[sunshine11219]

on 11/15/2008 great information

[patti80]

on 11/15/2008 Great article. Once you start giving to many charities, they beg for more frequently. Stick to your budget and what you're comfortable with.

[LilacGirl]

on 11/15/2008 Good idea, planned charity giving would be a way to make sure you didn't forget to do your part to help others on a regular basis.

[Butterfli]

on 11/15/2008 Excellent article! Thanks! 5*