In the world of personal finance, we often hear about the importance of saving, investing, and budgeting. But there's one aspect that's equally significant, yet sometimes overlooked: the act of giving. The power of giving back to your community or supporting causes you're passionate about can not only make a positive impact but also play a crucial role in your financial preparedness.
In this article, we'll take you on a journey through our experience with a donor advised fund, and how it transformed our financial plan into a tool for making a lasting impact.
Donor Advised Funds: Power and Flexibility
Donor advised funds are like a charitable savings account with two major benefits: tax advantages and flexibility. When you contribute to a donor advised fund, you receive an immediate tax deduction, potentially reducing your taxable income for that year. The second benefit is the flexibility to decide when and how to distribute the funds to your chosen charities, allowing for strategic giving.
Our journey began when my husband and I decided to open our donor advised fund through Schwab Charitable. This choice made sense for us because all of our financial accounts are already with Schwab, and they offer the invaluable feature of no minimum contribution requirements.
Starting Small, Building Momentum
Our first step was a modest one. We committed to contributing $100 per month to our donor advised fund. This amount was manageable, comfortably fitting into our monthly budget. However, the impact was extraordinary. For the first time, we had a dedicated fund specifically for giving.
This transformed how we supported causes and organizations we care about. No longer did we need to scramble for funds from our monthly budget whenever we wished to donate to charities or participate in our children's school's annual giving drives. We had funds set aside for that very purpose.
Increasing the Impact
As time went by, we realized that we could do more. A year later, we decided to increase our monthly contribution to $150. With this adjustment, we hoped to make an even greater impact compared to the previous year. Our donor advised fund empowered us to seamlessly incorporate giving into our budget, ensuring that we consistently set aside funds for charitable purposes.
Aligning with Our Values
Tithing, the act of giving a portion of one's income, has always been a significant aspect of our financial management. Our hope is that, through the donor advised fund, we can gradually increase our giving over time. While we are currently focusing on dollar amounts, our long-term goal is to return to tithing 10% of our income within the next several years.
The Journey of Impactful Giving
Our decision to open a donor advised fund was a journey of both financial preparedness and heart-driven giving. It allowed us to harness the true power of purposeful generosity. With this new tool in our financial toolbox, we embarked on a path that not only benefits our budget but also resonates with our core values.
Transforming Our Giving Philosophy
As we delved into the world of donor advised funds, we were introduced to a giving philosophy that was not just about occasional acts of charity but a continuous commitment to making a difference. We realized that we could make our contributions more impactful and sustainable by creating a dedicated fund for giving.
Strategic Giving Made Easy
One of the most significant advantages of our donor advised fund is the flexibility it offers. With the ability to decide when and how to distribute funds, we found that we could strategically plan our charitable contributions. This empowered us to support causes at the right time, when our contributions could have the most significant impact.
A Tool for Budgeting and Giving
Our donor advised fund became a dual-purpose tool in our financial planning. It allowed us to earmark funds for charitable giving while also aiding us in budgeting. Knowing that we had set funds aside for giving gave us financial peace of mind and ensured that our charitable endeavors were not just an afterthought but a deliberate part of our financial plan.
Scaling Up for Greater Impact
With time, we realized that we could do more and make a more substantial impact. By increasing our monthly contributions, we aim to take our giving to the next level. Our donor advised fund empowers us to scale up our charitable endeavors as our financial situation allows, ensuring that our impact continues to grow.
A Return to Our Values
Tithing has always held a special place in our hearts as a way to give back and support those in need. Our donor advised fund aligns with this principle, allowing us to gradually work toward returning to tithing 10% of our income. It's a financial journey rooted in both responsible financial management and the fulfillment of our personal values.
Conclusion: A Giving Legacy
Our experience with a donor advised fund has not only changed the way we give but also how we approach our financial plan. It's a reminder that finance isn't just about securing our future; it's a tool for creating a legacy of giving. By contributing consistently, adapting our contributions, and aligning our financial plan with our core values, we're making an impact that will resonate for years to come. It's not just about dollars and cents; it's about making the world a better place, one contribution at a time.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by GW Financial, Inc. to provide information on a topic that may be of interest. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2023 GW Financial, Inc.