What are the benefits of being a philanthropist?
Many philanthropists are driven by a deep desire to solve social problems and help others. In addition, the U.S. federal tax code rewards giving in a variety of ways; deductions against income, capital gains and estate taxes.
Studies show that philanthropy provides other benefits; researchers have found that philanthropy contributes to the following positive effects:
- Greater overall happiness
- Lower levels of stress
- Better physical health
- Greater sense of connection to others
Millions of dollars are not required to be a philanthropist. Donating “time, talent or treasure” can increase the affect of giving by thinking strategically. Educational resources like Boost Your Giving IQ provides worksheets and other tools for those interested in smarter giving. These tools can help decide what’s important and create an action plan that maximizes resources.
Approaches to Giving
Donors are changing how they finance their giving. The following strategies are becoming more popular and common:
Investing that aims to achieve specific social or environmental benefits in addition to a financial return. Also called social impact investing, it puts markets to work for profit and global good.
Donations of non-cash assets:
Converting stocks and securities, limited partnership interests, real estate and other non-cash assets into funds for charitable giving. In 2020, two-thirds of contributions to Fidelity Charitable were non-cash assets.
A philanthropic account that allows donors to contribute to a charity and qualify for an immediate tax deduction. Donors may recommend grants over time. It’s the fastest-growing charitable giving vehicle in the United States because it’s simple, flexible and a tax-efficient way to give to charity.
Implementing specific financial strategies, such as contributing long-term appreciated securities instead of cash or setting up a donor-advised fund may increase ones charitable capacity. Some donors set up giving circles; which bring individuals together to pool their resources around a common cause to have a greater affect. There are many alternatives, each with its own requirements and benefits.