4 Steps To Smarter Charitable Giving

Donors who give $1 million-plus a year and donors who give under $25,000 a year make the same basic mistake: not having a giving plan. Fidelity Charitable wants to help all its donors and would-be donors be better givers (and stash more in their charitable kitties aka donor-advised funds at Fidelity); hence the launch of its Boost Your Giving IQ campaign.

“Donors come with the same questions,” says Elaine Martyn, vice president of Fidelity Charitable’s private donor group. “A lot of times donors will come to us having started grantmaking to an organization, and then come to us to have us help them develop questions to get to the next level with a significant gift,” she says, adding, “Our goal is to share information that will help move people along on their giving journey.”

With a donor advised fund account, you get a tax deduction when you set up the fund (that counts as a charitable donation), and then you specify grants later as you see fit. There are tax advantages for using a donor-advised fund over a private foundation; you can give publicly-traded or even privately-held stock. You can open a fund at a charity affiliated with Vanguard, Schwab or the “private label” funds the Naitonal Philantrhopic Trust offers through UBS, J.P. Morgan and other financial service providers.

Of more than 75,000 donor-advised funds at Fidelity, 60% have balances under $25,000, but about 5,500 have balances of $250,000 or more. It takes a balance of $1 million or more to be part of the elite private donor group, but you don’t have to be part of that group to become a smarter donor. “Whatever your giving level, you can have an incredible impact,” Martyn says.

Here are the four steps to become a smarter giver.

Write a mission statement. Only one out of three donors who make gifts of $100,000 or more a year have mission statements or articulated goals for giving, according to Fidelity’s Giving & Planning Survey. For those who give $25,000 or less a year, only 16% have plans. Yet a mission statement can provide clarity on what grants to make and what appeals to decline. “It’s a great starting point when you’re thinking about what kind of impact you want to have,” says Martyn. It can be just one to three sentences. For example: “I will help veterans successfully transition out of the military by funding programs that provide job support services.” Fidelity’s mission statement worksheet helps you hone yours by asking specific questions about what inspires you and where you might focus, for example: What is your geographic scope?

Reach out to potential grantees. The worksheet 9 Questions You Should Ask Every Nonprofit shows you how to begin testing potential grantees with questions. Learn more about the organization’s programs and goals, its most urgent needs, and what would make the greatest difference in helping the organization get better at what it does.

Create an action plan. This worksheet is a little intimidating at first. First steps are researching charities in your area of interest, creating a list of skills and expertise you’d like to use to help, and creating a giving budget. Next steps include exploring ways to leverage giving and considering establishing legacy gifts.

Amplify Your Impact. Fidelity says its donors who learned about giving from their parents are 65% more likely to teach their own children to give. So pass it on. These tip sheets cover ways to include your children in your giving, and introduce donors to the concepts of giving circles and donor networks.

Need more handholding? There’s a network of Fidelity-vetted independent philanthropy advisors who can help coach you on how to measure impact or how to distribute an inheritance to charity. They’re sharing their insights here; it’s a discussion worth following.