How To Get Better At Giving To Charity

We were going to talk about giving, right? Christmas is coming up. That's a big holiday for a lot of you. I know everybody listening to this doesn't celebrate it, but it's a big holiday in this country. And for a lot of you, it's.

A time, you know, Christmas time and.

The end of the year is a time we often think about giving. And I think giving is an important money activity.

There's really five money activities in life, right? There's earning, saving, investing, spending, spending and giving. And you need to learn how to do all five of those. Well, it's not as easy as you might think to be a good spender and really be good at trading money for something you value.

And it will actually bring you more happiness and make other people's lives easier.

The same thing with giving. It's not as easy to give well as you might think. You know, you don't want any negative.

Consequences to your giving, right? It's like when we're giving money to.

Our kids, we don't want to dump.

It all to them the day they.

Walk out of high school, right?

That's a good way to ruin their lives.

You want to give with intentionality and think about how much you're giving and how you're giving it and when you're giving it and those sorts of things. That includes when you're giving money to charity. Now, one cool thing about giving to charity is if you itemize your taxes.

And even if you don't really, our government will actually incentivize you to give to charity.

One of the best ways to give, if you are of RMD age, you know, 72, 75 plus, whatever. Probably the best way to give is what's called a qualified charitable distribution qcd, right? And this is money that goes straight from your IRA to the charity. You don't pay any taxes on it, the charity doesn't pay any taxes on it, and it takes the place of up to $100,000 slightly more.

Now it's indexed to inflation up to $100,000 of your required minimum distribution.

So if you don't need your RMD and you're charitable, well, just do a qcd. It's probably the best way for elderly people to give to charity. But you can give directly to charity. You can give them cash, you can.

Give them, you know, your time. You know, you can't deduct the value of your time on your taxes, but you can give your time and expertise.

You can also give non cash items. One of my favorite ways to give to charity is to give appreciated shares of mutual funds that you've owned for at least a year and have substantial gains. Because the beautiful thing about this is you get the charitable deduction for the whole value of what you give. If you itemize on schedule A, you get to take the whole deduction for the value of what you gave and then they sell it. So you never pay the capital gains on it. And, and because they're a charity, they don't have to pay the capital gains taxes on it. So that's cool. Nobody pays capital gains. You get the whole deduction. And that's a pretty awesome way to give to charity.

And you can do that pretty easily just giving it to any charity that can handle, if they have a brokerage account, they should be able to handle it. Now if you try to give them some weird crypto asset or your small business, they might not be able to handle it. But most charities, most big charities anyway, can handle a donation of stock or mutual fund shares.

The problem with giving a lot of money to charity, well, one of the problems, right, is that you get put on a list. You get put on their list and they might sell their list to other charities. And all of a sudden what you will discover is that your email box, your mailbox becomes full of what I call charity porn. And it's these glossy brochures that look like they cost about $5 a piece to print. This starts showing up in your mailbox and they just keep coming, right? That charity might send you one every month for the rest of your life. And then they sold it to five other charities, right?

And they'll send you one every month for the rest of your life.

And your box just gets full of this and you start going, well, I don't really want my charitable donations to be spent trying to get more donations, especially from me. I already know about this charity. I don't need them advertising to me. I'm probably going to give to them next year anyway. So one cool thing I've found to avoid this charity porn problem is to give anonymously. And the best way to do that is to use a donor advised fund, a DAF or daf.

And these are available at Vanguard and Fidelity and Schwab, and there's a gazillion others out there.

One of the cool ones we had.

Their CEO on here a year or.

Two ago is called dafi. And a lot of these have relatively low fees associated with them, especially if you don't leave much money in there.

If you just run it through the.

Daft on the way to the charity.

You pay almost nothing to use these things.

But the beautiful thing about it is all your donations can be anonymous. You get the same charitable deduction and in fact your taxes become easier because.

You just have to keep track of one receipt instead of a gazillion.

And they don't know who you are so they can't send you charity porn.

And I think that's a beautiful thing. I feel like more of my money is going toward the actual charitable cause I want to support. So look into a donor advised fund.

Fidelity has much lower minimums, minimum amounts.

You can start with and smaller amounts that you can donate at a time to the charities than Vanguard does. But if you're doing a lot of giving, Vanguard may work well for you like it has for us. Might also want to check into DAFI.

We don't have any DAFs that sponsor us. If you run a DAF and you'd like to sponsor the white coat investor, contact us.

We'd love to have some DAF sponsors, but for the most part I can just tell you about the ones I've used and the ones I've heard other people have used with success. And that includes Vanguard and Fidelity and Dafi. But I'm sure there's lots of other great DAFs out there. I just want to tell you about the concept because it's been so helpful to us.

It's also helpful to some people that.

Maybe they're going to be retired after.

This year and they want the big deduction right now.

Even though they're going to spread out their giving to charity over a few years. That's another thing a DAF can let you do. I call that a little bit of the jerk move. Right?

Because you get deduction.

The charity doesn't get squat.

So please don't do it forever.

If you're giving a charity, I think you actually do need to get the money to charity eventually. But any giving is better than no giving. It's not like you can take the.

Money out of a daft. Once it's in there, it's going to charity at some point.

So thanks.

For those of you who are supporting charities.

Americans in general are very good supporters of charities. I saw an article the other day.

Wyoming was the most charitable state this last year. Utah, I think, came in second.

They're usually fighting for first or second. But for those of you out there given charity, thank you so much for what you're doing. And those of you who are just spending your day serving others. I know a lot of you like me.

About 20% of your patients don't pay you. So thanks for doing that work too.

It really does make a difference.

The hosts of the White Coat Investor are not licensed accountants, attorneys or financial advisors. This podcast is for your entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.