The Power of Charitable Giving

The old adage says, “It’s better to give than to receive.” As I’ve journeyed through my career, I’ve found these words to resonate more and more, both personally and professionally. Charitable giving is not just about donating; it’s about creating a lasting impact and being astute with our financial decisions. Let’s look into the dynamics of giving, sharing a few personal stories and key insights.

1. Tax Benefits of Charitable Giving

A few years ago, a dear friend and client approached me. She had recently sold her business and wanted to give back but was concerned about the potential tax implications of her newfound wealth. We discussed the power of charitable giving and how it could benefit her in more ways than one. Donating to qualified charitable organizations allows you to contribute to causes close to your heart and can lead to potential tax breaks.

Donating to IRS-approved charities can lower your taxable income when you itemize deductions on your tax return. In fact, deductions can sometimes amount to up to 60% of your adjusted gross income. And let’s not forget the emotional and societal benefits of such acts.

2. Establishing a Donor-Advised Fund

One of the highlights of my career was when a young entrepreneur, bursting with passion for various causes, asked for guidance on maximizing his charitable contributions. Introducing him to the Donor-Advised Fund (DAF) concept was a game-changer.

Think of a DAF as a personal charitable savings account. You make contributions, reap immediate tax benefits, and direct where those funds should be channeled over time. The beauty of DAFs lies in their flexibility. From stocks to real estate, various assets can be donated. As these assets potentially grow tax-free within the fund, you’re empowered to give even more.

3. Legacy Giving: Bequests and Trusts

My grandfather always said, “Ensure your life’s work continues even when you’re not around.” This sentiment stayed with me and influenced how I advise my clients on estate planning. Legacy giving, through bequests and trusts, allows you to do just that.

A memorable instance was assisting a couple in their late 70s, eager to leave a legacy for environmental conservation. By establishing a charitable trust, they ensured sustained support for environmental causes and enjoyed potential tax advantages.

4. Giving Stocks Instead of Cash

A transformative moment for me was realizing the potential of non-cash assets in charitable giving. When a client holding significantly appreciated stocks wished to support a local art institute, we explored the idea of donating stocks instead of cash. Not only did this maximize the donation amount (by avoiding capital gains tax on the appreciation), but it also provided a hefty tax deduction based on the full market value of the stocks.

In the grand tapestry of life, every thread of goodwill counts. Charitable giving is more than a financial strategy; it’s a testament to our values, hopes, and aspirations for the world. Considering your financial journey and the legacy you wish to leave, ponder this: How do you want to be remembered? For the wealth you amassed or the positive change you championed?

Charitable giving offers a profound way to intertwine personal passions with financial wisdom. And while the financial benefits are significant, the intangible rewards – the smiles, the gratitude, the difference you make – are immeasurable.

At Tomren Wealth Management, we believe in the power of informed giving. Not as a sales pitch but as a heartfelt ethos. Let’s weave a narrative of change together, leaving a legacy of impact and love.

Michael Tomren is a Financial Planner with Tomren Wealth Management in San Ramon, CA. Tomren Wealth Management is a Team-Based Wealth Management firm specializing in Investment Planning, Retirement Planning, Tax Planning, & Estate Planning. For more financial education or to speak to someone about your financial plan, visit https://www.tomrenwealth.com.

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Michael Tomren is a Financial Planner with, and securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC