How to Create a Legacy Through Charitable Giving and Planned Giving

August 11, 2020

It’s a beautiful thought: to leave behind more than just possessions. To create a lasting impact on the world, to support causes you believe in, and to contribute to a brighter future. Creating a legacy isn't about wealth; it’s about intention and generosity. This post explores how you can achieve that through charitable giving and, importantly, through planned giving strategies.

What is Charitable Giving?

Charitable giving is simply donating money, goods, or services to a registered charity. This can take many forms, including:

Direct Donations: The most straightforward approach – donating cash, check, or online.
In-Kind Donations: Donating items like clothes, furniture, or supplies.
Volunteer Time: Donating your time and skills to a non-profit organization.

What is Planned Giving?

Planned giving goes beyond simply donating today. It’s a strategic approach to philanthropy that integrates your estate plan, allowing you to make a significant and often larger impact. It's about leaving a structured donation, ensuring the charity receives the benefit you intended, even after you’re gone. Here are some key planned giving techniques:

Bequests: You can name a charity as the beneficiary in your will or trust. This is a simple and effective way to ensure a long-term gift.
Charitable Lead Trusts: These trusts make regular payments to a charity for a specified period and then transfer assets to your beneficiaries.
Retirement Beneficiary Designations: You can designate a charity as the beneficiary of your IRA or 401(k) during your lifetime, and also include this designation in your will.
Life Insurance Policies: Naming a charity as the beneficiary of your life insurance policy is a powerful way to support a cause you care about.
Donor-Advised Funds (DAFs): These funds allow you to make an initial contribution and then recommend grants to charities over time. You receive an immediate tax deduction and retain control over the granting process.

Benefits of Planned Giving:

Larger Impact: Planned giving allows you to contribute a substantial portion of your estate.
Tax Benefits: Charitable donations often qualify for significant tax deductions (consult with a tax advisor).
Long-Term Support: Your gift continues to benefit the charity even after you’re no longer able to contribute.
Personal Fulfillment: Knowing your legacy will continue to support a cause you’re passionate about provides immense satisfaction.

Getting Started:

Identify Your Values: What causes are you most passionate about?
Consult with a Financial Advisor: Discuss your goals and how planned giving can align with your overall financial plan.
Work with a Tax Advisor: Understand the tax implications of your charitable giving.
Talk to an Estate Planning Attorney: Ensure your will and trust documents clearly designate your charitable beneficiaries.
Research Charities: Carefully vet potential charities to ensure they align with your values and are financially responsible. Websites like Charity Navigator (https://www.charitynavigator.org/) and GuideStar (https://www.guidestar.org/) can help.

Leaving a lasting legacy is an act of profound generosity. By incorporating charitable giving and planned giving strategies into your estate plan, you can create a truly meaningful and enduring impact on the world.