Each passing holiday season gives us an opportunity to remind ourselves of others in need, but the truth is that we can spend our time and money year-round and still benefit from giving and volunteering. While this time of year may increase initial interest in giving, hopefully the benefits you see in your heart and pocket will encourage you to find ways to give back all year long.
In addition to the sense of satisfaction you get from helping others and the sense of belonging you connect with through your efforts, there are also significant financial benefits. You have many options for how you approach charity, whether you volunteer your time or give cash or other assets to your favorite nonprofits, and whatever approach you take will have an impact.
Personal growth, connection and satisfaction
First, let’s start with emotional well-being. If you’ve ever donated in any way, you probably know the truth about this: Giving back actually helps us feel better about ourselves, as numerous studies have confirmed. One such study, conducted by professors at the University of Missouri, Columbia, and the University of California, Riverside, found that those who gave gifts to others scored higher in feelings of joy and satisfaction. (opens in a new tab) against those who did not give to others.
Another study, conducted by psychologists at the University of Chicago Booth School of Business at Northwestern University and the Kellogg School of Management, showed that we feel good for a long time after we have given to others.
When it comes to volunteering, a powerful benefit comes from direct networking – meeting new people – potentially in your current role and/or career field. Whether done online or in person, making new professional connections while helping others can be a real win. If you so choose, you can also talk about your volunteer activities with colleagues and clients, or include your passion for giving back in your company’s marketing materials, such as your corporate bio.
Those who see you in this new light may 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 your blessings and inspire others to give to those less fortunate.
Another benefit of volunteering your time is the real potential to improve your current skills and maybe even acquire new ones. As a certified financial planner, I have volunteered with several nonprofits in recent years to provide pro bono financial guidance to those who need it but do not have sufficient financial assets to qualify or pay for services. It’s a great feeling both to offer concrete advice to those who are ready and willing to implement it, and to learn new ways to communicate that advice.
Don’t forget: The time you spend volunteering with an organization isn’t tax-deductible, but expenses such as travel or parking costs may be. (opens in a new tab).
It won’t hurt to lower your tax bill
Another form your generosity can take is giving financial assets to non-profit organizations. This may very well be tax deductible to you. Specifically, when you donate cash to a public charity, you can generally deduct up to 60% of your adjusted gross income. Additionally, valuable assets, including long-term inventory and property, are generally deductible at fair market value, up to 30% of adjusted gross income, provided you hold them for more than one year.
For those who must take required minimum distributions (RMDs), donating money from a tax-deferred retirement account, such as an IRA, can save you from having to report the RMD amount as taxable income in the year it is due. Specifically, you can choose to make charitable contributions (QCDs) of up to $100,000 each year that are not included in your annual taxable income.
Your employer may even be able to match your donations up to a certain amount, so be sure to ask if they will.
The bottom line is that all forms of altruism have a positive impact both in the world and in your own life. The amount of time, money, or both that you can share with others in need will vary throughout your life, but the benefits of doing so are meaningful and measurable, both for you and for others.
Halbert Hargrove Global Advisors, LLC (“HH”) is an SEC-registered investment advisor based in Long Beach, California. Registration does not imply a certain level of skill or training. Additional information about HH, including our enrollment 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 individual investment advice. It should not be construed as a solicitation to offer personal securities transactions or to provide individual investment advice. The information provided does not constitute legal, tax or accounting advice. We recommend that you seek the advice of a lawyer and a qualified accountant.
This article is written and submitted by one of our contributing consultants, not the Kiplinger editorial staff. You can check the advisor’s records with the SEC (opens in a new tab) or with FINRA (opens in a new tab).