Each passing holiday season reminds us of the opportunity to give to others in need, but the truth is, we can deploy our time and money throughout the year and still reap the benefits of donating and volunteering. While this time of the year can propel an initial interest in charity, hopefully, the benefits you see in your heart and pocketbook encourage you to find ways to give back year-round.
Aside from feeling fulfilled by helping others and a sense of belonging shared with those you connect with through your giving efforts, there are also significant financial benefits to be had. You have various options in how you approach charity, whether you volunteer your time or donate cash or other assets to your favorite nonprofits, and any approach you take will have an impact.
Personal Growth, Connection and Contentment
First, let’s start with your emotional well-being. If you have been charitable in some form, you’ll likely recognize the truth in this: Giving back actually does help us feel better about ourselves as confirmed by multiple studies. One such study, conducted by professors at the University of Missouri, Columbia, and the University of California, Riverside, revealed that those who gave to others tended to score much higher on feelings of joy and contentment (opens in new tab) than individuals who did not give to others.
Another study, led by psychologists from the University of Chicago Booth School of Business and Northwestern University Kellogg School of Management, showed that we feel good about ourselves for an extended period after we’ve given to others.
When it comes to volunteering your time, one powerful benefit comes from the sheer activity of networking — meeting new people — possibly in your current career role and/or industry. Whether done online or in person, creating new career connections while simultaneously helping others can be a real win-win. If you so choose, you can also talk about your volunteering activities with colleagues and clients or include your passion for giving back in your company’s marketing materials, such as in your corporate bio.
Those who see you in this new light might even be inspired to give back in their own way. You may even consider recruiting family members to join in; it’s a great way to instill a sense of gratitude for one’s blessings and inspire others to give to those who are less fortunate.
Another benefit of volunteering your time is the real potential to sharpen your current skills – and even perhaps acquire new ones. As a Certified Financial Planner, I’ve volunteered with several nonprofit organizations in recent years to offer pro bono financial guidance to those who need it but don’t have sufficient financial assets to qualify or pay for services. It’s a wonderful feeling to both offer concrete advice to those ready and willing to implement it and also learn new ways to communicate that advice.
Don’t forget: The time you spend volunteering for an organization is not tax-deductible, but expenses such as travel or parking costs may be (opens in new tab).
Trimming Your Tax Bill Doesn’t Hurt
Another form your generosity can take is donating financial assets to nonprofit institutions. Doing so may very well net you a tax write-off. Specifically, when you donate cash to a public charity, you can generally deduct up to 60% of your adjusted gross income. Moreover, appreciated assets, including long-term appreciated stocks and property, are generally deductible at fair market value, up to 30% of your adjusted gross income, provided you’ve held them for more than a year.
For those who must take required minimum distributions (RMDs), donating money from a tax-deferred retirement account such as an IRA can absolve you of otherwise having to include RMD amounts as taxable income in the year that they must be taken. Specifically, you can elect to make qualified charitable donations (QCDs) up to $100,000 each year that are not included in your annual taxable income.
Your employer may even match your donations up to a certain amount, so be sure to inquire if they will.
The bottom line is that all forms of altruism make positive impacts both in the world and in your personal life. The amount of time, money or both that you can share with others in need will vary throughout your lifetime, but the benefits of doing so to both you and others are both meaningful and measurable.
Halbert Hargrove Global Advisors, LLC (“HH”) is an SEC registered investment adviser located in Long Beach, California. Registration does not imply a certain level of skill or training. Additional information about HH, including our registration status, fees, and services can be found at www.halberthargrove.com. This blog is provided for informational purposes only and should not be construed as personalized investment advice. It should not be construed as a solicitation to offer personal securities transactions or provide personalized investment advice. The information provided does not constitute any legal, tax or accounting advice. We recommend that you seek the advice of a qualified attorney and accountant.