5 ways millennials can have the most impact donating their time and money to charity

millennials volunteering
About 35% of millennials volunteer for three or more charitable organizations, according to Fidelity.
  • Research shows that many millennials are generous with their time and money, but around 40% of donors say they aren't satisfied with their current charitable strategy. 
  • To have the most impact, plan ahead: create a mission statement, do you research, and decide how much you want to give.
  • Also, consult a financial advisor to take advantage of tax benefits, and consider non-traditional ways to give, such as through impact investing.
  • This article is a contributed piece as part of a series focused on millennial financial empowerment called Master your Money.

If you're under 40, you've already seen your share of challenging circumstances in your lifetime: 9/11, the 2008 recession, and now the pandemic. 

But if you're like many of your generation, you're also among the first to respond with generosity when you are able. Younger donors were among the first to help when the pandemic struck: according to Fidelity Charitable research, 46% of millennials said they planned to give more, compared to 14% of Baby Boomers. 

This shouldn't come as a surprise. The millennial generation is known for leading with values - for example, paying attention not only to which organizations to support, but which companies to buy from. You're hands-on, too. About 35% of millennials volunteer for three or more charities, compared to less than a quarter of Generation X and Baby Boomer volunteers.

But many younger donors - more than 40% in a recent Fidelity Charitable study - also said they weren't satisfied with their giving, while 35% said they weren't strategic with how they gave. 

Here are five ways to change that with a few simple practices that can help you give more by giving smarter, both this year when needs are greater than ever, and in the future.

1. Plan ahead

You will make a greater impact if you focus your giving on what matters to you most, rather than reacting in the moment to requests from friends, for example. Identify what you want to do, then allot specific amounts of time and dollars to that purpose.

Begin by creating a mission statement. Decide what's important to you and write it down: why you want to give and what impacts you hope to see. Then keep that mission statement nearby to help you stay centered in a sea of causes that could all use support. Space for spontaneity is important, but to make the most of your giving, direct the bulk of your charitable dollars to the causes you care about most.

Next, do your research. Use online search tools like GuideStar or Candid to find reputable charities that match that mission statement you now have handy. 

Finally, decide how much you want to give. Factor in any "free" funding sources, like a company match. Decide how much to set aside for giving this year. If you can't give that amount all at once, calculate how much that comes to on a weekly or monthly basis. Even small amounts will add up over time.

2. Be tax-savvy

Making informed choices with your money can mean more tools in your charitable giving toolbox - and more to devote to your mission. First, I suggest seeking the counsel of a financial advisor to ensure that you're taking advantage of tax incentives designed to help you give more. If you itemize your deductions, be sure you're itemizing your charitable contributions. (Note that for 2020 taxes, you can deduct up to $300 in charitable contributions without itemizing). 

"Bunching" your giving - donating two years of contributions in one year in order to reach the charitable tax deduction threshold - is also a smart move, especially if you receive a large sum of money at once, like a bonus or an inheritance.

If you have a non-retirement investment account, consider donating stock that has appreciated for more than a year. Donating long-term appreciated assets like bonds, stock, or cryptocurrency can mean you don't have to pay capital gains tax - which may allow you to give up to 20% more compared to liquidating the asset and donating the proceeds.

3. Make donations automatic

Life gets complicated, and decision fatigue is real. Help yourself prioritize your values by regularly depositing funds from your paycheck to a dedicated charitable giving account or set up recurring transfers with a charity through your bank account or credit card. Many organizations' websites offer ways to set up automatic recurring donations.

Donor-advised funds, like the Fidelity Charitable Giving Account, allow you to manage all of your giving through a single account and see your impact over time - it's like a charitable investment account solely for supporting causes you care about. Contributions to a donor-advised fund are eligible for an immediate tax deduction, and funds in the account can be invested to grow tax-free. This can help build your budget into a larger gift over time, plus it gives you more time to decide where to give for maximum impact. 

4. Bring others along

Your story is powerful. Share your charitable work with others and increase your impact by recruiting more people to support your cause.

Use social media to everyone's benefit by highlighting how charities you care about are having an impact, whether on your group chat, on NextDoor, or on traditional social media sites like Twitter, Instagram, or Facebook. When you post, think like a publicist - always mention the charity's full name and include a link where others can help out. 

A more direct option is forming or joining a giving circle, a group of philanthropists united around common causes. By joining forces with other committed givers, you'll be able to make more significant donations while connecting with like-minded people.

5. Think beyond traditional giving with impact investing

Charitable giving is a critical way to help make the world a better place, but it isn't the only way. You can complement your giving by choosing a values-based approach to investing, called impact investing. This can mean investing in organizations with an explicit social mission or avoiding investing in companies with practices that may have a negative impact. 

More than 77% of affluent millennials have made an impact investment - and there are many different ways to do this. You can invest in mutual funds, exchange-traded funds, or bonds that choose companies that align with your values, such as human rights or environmental practices. Many companies now offer impact investing options as a part of company retirement plans. Impact options may also be available for those using donor-advised funds

Kristen Robinson is chief operating officer at Fidelity Charitable, and a member of BI's Money Council.

Read the original article on Business Insider

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