Write a memoir. Be a mentor. Support a cause.
As we move up the Hierarchy of Financial Needs, new demands surface. Once Financial Independence gets reached, your focus shifts to how you can leave a legacy.
There are many different ways to leave your mark on the world. Some people will teach, others may write a book, and most will choose to support a cause.
A charity is a nonprofit. But, not all nonprofits are charities. There is one main difference between them.
A nonprofit is a group that exists for the benefit of its members, like a club or HOA. While charities seek to improve the quality of life of the general public. They want to make a lasting positive impact on the world.
But, not everyone thinks this way. Some people lie, cheat, and deceive potential givers. They take drastic measures to scam people that want to leave a legacy.
It’s important to have a procedure to verify the organizations you want to support. This plan assists you in clarifying who you want to help and in verifying the integrity of the charity.
You spend time working hard for your money. So, I know you want to make sure it works even harder for the causes that are near and dear to your heart!
Step 1 – Selecting A Cause
There are millions of charities in the United States. All these options can be overwhelming, making it difficult to choose which cause to support.
Begin the process of selecting a charity with some soul searching. Consider the following questions:
- What impact do you want to make?
- What’s important to you?
- What are some of your beliefs, values, and morals?
- What do you enjoy and want to preserve for future generations?
- What are some wrongs you want to help make right?
- What types of organizations are you NOT interested in supporting?
Also, think about your goals and the results you want to help achieve. Are you interested in large global issues or local matters?
Organizations with widespread goals are usually large national or international charities. Some of them focus on curing diseases, solving large global issues, or protecting parts of the environment.
Smaller causes tend to be more community-focused. Their goal is to have a local impact and serve their immediate surroundings.
Charities support a wide variety of causes. So, no matter where your interest lies, there’s a movement that’s working to make it better!
Love guinea pigs? There’s a charity that rescues and rehabilitates them. Have a soft spot for disabled pets? Another organization helps dogs who can’t walk. Or do you have a zombie problem? This group focuses on removing them and when they’re not busy with that they help with disaster relief.
Step 2 – Researching Charities
Once you decide on the cause you want to advance, find charities that support it.
Two great sites that will help you support a cause and leave a legacy are Charity Navigator and Guide Star. Their easy to use search function allows you to explore almost 2 million organizations!
These sites help you research charities, too. They provide basic information on the mission, financials, and operations of each cause.
But, not all charities get listed on these sites. Smaller and more local ones may require a little more digging.
The IRS designates and keeps track of all charities. They store this information in the IRS 501(c)(3) Database which you can use to find groups in your area and the causes they support.
The IRS Database also lists information on each charity’s tax exemption status and previous tax filings. These organizations file using Form 990. It displays their revenue, expenses, and net assets, just like your personal financial statement.
Review the charity’s expenses. The more it pays in overhead, administrative, and fundraising costs, the less money it has to put towards the actual mission. This can reduce the positive effect your money ends up having. (like total expense ratios)
Once you’ve found an organization that will help you leave a legacy, go one step further. Call them and ask the following questions:
- What’s their mission?
- What are their short term and long term goals?
- How are they progressing towards their goals?
- What are some of their past accomplishments?
- Where are they struggling?
- What resources are available to prospective donors?
The charity’s purpose should be clearly stated. They should have SMART goals to help them reach their short and long-term targets.
Most organizations will be happy to provide you with statistics about their efforts and results. Review them and their track record for success. They’ll be a good sign of what you can expect if you decide to donate.
The answers to these questions will also give you insight. They’ll help you determine if your values align and the ways your charitable contributions will get used.
Do an internet search for the organization and read their reviews, too. Make sure the feedback you find is consistent with what you’ve been told by the charity.
Also, search for the group on Give.org. This site reviews charities and helps donors make better giving decisions. It lets prospective donors check for complaints, too.
Scams are prevalent in today’s society and by conducting research you reduce your risk. This ensures your money goes to the right place and helps you to leave a legacy!
Step 3 – Making The Donation
There are two types of donations, restricted and unrestricted. Restricted donations get made for a particular project or a specific purpose. While unrestricted funds allow a charity to use the gift however it sees fit.
Restricted donations limit an organizations’ options and in some cases can be detrimental to it. These funds must get used for a particular task, which means the charity has to track where these resources get spent. This uses its time and money, both of which would be better spent on its actual mission!
Also, restricted donations can affect a charity’s budget. In some cases, they have enough money, but still struggle to pay bills because their capital is confined to one aspect of its mission.
It’s difficult to change a restricted donation to an unrestricted one. It takes time and is costly, which further exhausts the resources of the cause you want to support.
Remember, the work you did in Step 2? The whole reason you completed it was to feel comfortable with the charity and its mission. Not just one aspect of it!
The best way to support your cause and leave a legacy is through unrestricted donations. They allow the organization to use your gift in whichever way will best advance its mission.
More Tips To Leave A Legacy
- Give directly to the organization, don’t use a third party
- Send gifts by check or bill pay, not by credit car
- Add the expense to your monthly budget
- Check with your employer to see if they offer gift matching
- Giving doesn’t have to be in cash; stocks, vehicles, and houses work too!
- Give your time and volunteer
Tax Savings For Charitable Donations
Disclaimer: I am not a CPA. Be sure to speak with your tax professional before donating.
Choosing to support a cause and leave a legacy is valuable. It increases your happiness, improves your financial wellbeing, and makes the world a better place. For some, it may even reduce your taxes!
Every taxpayer can take a standard deduction. But, in some cases itemizing your deductions results in a larger write-off!
The IRS publishes a list of qualified expenses that you can itemize. Comparing this total with the standard deduction determines which option is best for you. The larger the amount, the bigger the write-off, and the less you’ll pay in taxes!
A few of the current itemized deductions you may be eligible for are:
- Property, state, and local income taxes
- Gifts to charity
- Medical expenses
- Home mortgage interest
- Investment interest expense
Itemizing includes charitable gifts. So, when you decide to support a cause be sure to get a receipt. It should include:
- Name of Charity
- Name of Donor
- Date of Donation
- Description of Donation
- Amount of Donation
- A statement on whether or not any goods or services were provided in exchange for the donation
- If so, a statement of the value of the goods or services provided by the charity
Charities are important. They bring groups of people together that support a cause and want to make a difference.
These charities work hard to protect, raise awareness, and improve our world. But, they can can only be successful when we commit to their long term support.
How do you want to leave a legacy? Comment below.
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