End Of The Year Charitable Giving For Business Owners
This is typically the time of year when charitable organizations count on most of their revenue for the entire year. And, considering 2020 has been a year unlike any other, these organizations (especially the smaller ones) desperately need financial support from their communities.
Having founded and managed a small non-profit in a former life, I personally understand the stress and anxiety that comes with day-to-day fundraising efforts. But, this is truly the time of year that can make or break many small and mid-sized organizations. A disconcerting statistic is that 10% of all fundraising revenue for the entire 365 days of the year occurs in the last 3 days of the year.
For non-profits, this presents a challenge because they have to wait and hope they can meet their goals by December 31 each year. If they fall short, it typically means cutbacks in programs and often staff. The other important fact is that for all the fundraising activity that occurs in December, when the calendar turns to January, fundraising is essentially non-existent.
But, the statistic about the volume of fundraising in the last 3 days of the year is also unfortunate for the people giving the money. It means there likely wasn’t a strategic plan for these last-minute donations, specifically as it relates to personal financial planning and tax optimization. I am not a tax advisor nor am I a financial advisor, so it’s best to consult with your personal advisors in these areas. But, generally, you should be aware that donations to registered non-profit organizations are tax-deductible. This means your donations can offset profits like capital gains etc.
Consider A Personal Giving Strategy
Charitable giving is a unique and wonderful part of our American culture compared to the rest of the world. Those who aspire to “do good” and help others have a plethora of opportunities to make an impact. But, sometimes more choices are not better, and deciding how and where to throw your support can be overwhelming.
My advice is simple. First, keep in mind that doing something is always better than doing nothing. So, don’t wait for the perfect situation to jump in and help wherever you see a need. Jumping in to help is great, but ideally, you can step back and make a plan for yourself. I’m not talking about anything fancy or complicated. Just take some time to think about the things that matter to you. Carve out a block of time each year to go through this exercise because, as we learned from 2020, the world is always changing and our interests and passions may be pulled in different directions. Once you determine areas of interest, decide how you want to help and support the cause(s). Set reasonable goals for yourself and then make a commitment to achieve the impact you desire. There are three areas in which all non-profits need your help – often referred to as the 3 T’s – Time, Treasure, Talent.
Time, Treasure, Talent For Nonprofits
You don’t have to be rich or have any specific talent to be able to give your time to a local non-profit. Volunteering is a critical component that all non-profits count on and need to operate. So, find a cause you believe in and call them up or email and ask how you can help. I promise they will have a long list of things for you to choose from!
The most obvious and critical need for non-profits is money. But, again, you don’t actually need to be rich to make a difference. Any little bit matters and there are ways to maximize your contributions.
- Unrestricted gifts – Sometimes it may make sense to make a donation to a specific program or earmark your funds in a particular way. While non-profits appreciate all gifts, I can tell you candidly, restricted gifts are a nightmare. They require thorough internal tracking and also can result in certain programs having a surplus of funds while others go unfunded. If you like and trust the leadership, please give them unrestricted funds they can use where they need them most. If you don’t trust the leadership to do that, you shouldn’t be supporting them.
- Company match! This is a huge area of opportunity which unfortunately leaves millions of dollars wasted each year because people don’t submit the form to have their company match their gift. Literally, less than 15% of donations utilize available matching gifts! Anytime you make a donation, get your company to match it so you can double your impact without having to do anything (except submit a form).
- Set up a recurring monthly donation that comes straight out of your paycheck so you don’t even notice. It doesn’t matter how small, these donations are important. Consider increasing it slightly each year.
- Investment donations – consider transferring shares of stock to a non-profit. If the shares have a significant appreciation, you don’t have to pay for the capital gains. Plus, you will get a tax deduction for your donation – it’s a win/win/win. There are other ways to gift various investment vehicles, but I’m way out of my league so it’s best to consult with your financial advisor and make your donations part of your annual financial planning exercise.
Consider helping a local non-profit in an area you specialize. For instance, if you’re a…
Marketer – How can you help spread the word and raise awareness? Do they need help creating a brand identity?
Technology expert –What systems would help streamline operations? How can all staff be connected in the cloud? Is their data secure?
Accountant – offer to review their books or help with end of year tax returns.
Executive – would you be willing to serve on their Board of Directors? Would you become an advisor to the leadership team? Would you open doors to other talented people in your network? Will you help with fundraising efforts?
The Bottom Line About Helping Nonprofits
Non-profits are doing important work for our communities and they need our help. Not only to continue doing what they’re doing, but also to expand and increase their impact. No matter how you decide to get involved, I hope you will give it thoughtful consideration so you can have the true impact you desire.
About The Author
Stephen Drake is a consultant and fractional resource helping business leaders run their businesses more effectively by providing a unique combination of analytical and strategic insights. Prior to Mr. Drakes’s consulting practice, he founded and managed a successful 501c3 organization after having spent over a decade in management at fortune 100 corporations.
Mr. Drake would love to hear from you if you need help or advice.