Design Thinking: Charitable Giving

by | Oct 15, 2019

Autumn is a great time to think about charitable giving. As you are someone who plans ahead (or really, really wants to), getting these thoughts in place before the insanity of the holiday season truly hits your life and your pocketbook can help you focus on what’s most important, to you, your family, and your community. 

Of course, since we said “it’s a great time to think about charitable giving,” that’s exactly what we want you to do. Not just think, of course, but Design Think

That’s riiiiiiight, just like every other month in 2019, we are using the concept of Design Thinking to help you wrap your mind around exactly what you want to do, and consider how you might go about doing it. You see, it’s actually pretty easy for us to be prescriptive, and tell people that they “should” (errrrghh, we hate that word) do this or do that. However, we know from experience that it isn’t the prescriptive, technical answers, nor even the “shoulds” that help people make great decisions that they can stick to, and we’re committed to action

What helps people make great decisions, change their behaviours, and focus on actually doing all those difficult steps it takes to get where they actually want to go, is to dig deep into that icky, sticky sweet stuff that truly connects us with our goals: empathy

Yes, empathy with your cash flow, your taxes, your investments, your potential disability, your estate (and the people you leave behind), all those unknown future emergencies, your business, and that future version of you, who’s retired and confused about how to take the money from where. These don’t seem like “normal” things to have empathy with, but bear with us. Normality isn’t exactly our thing anyway – who ever got anywhere by being normal? Not you, not us, and not your plans for the future. Reaching your goals and maximizing your charitable inclinations is going to require far better things than normalcy.

We know that you think about giving to charity a lot – and you’re already very charitable. Statistics Canada tells us that 82% of Canadians 15 years and older made donations to charities and non-profit organizations in 2013. We know that philanthropy is vital to the ongoing well-being of our communities. We also know that it gives us sweet tax credits, because our government is invested in us helping each other. Realistically, though, choosing what to give, to whom, and when can be really confusing. You already have a lot going on. How are you supposed to untangle this? 

Start Here, With Empathy:

Empathy, in this way of thinking, is about setting aside your assumptions about the world, and the way things are done (all that “normal” stuff), so that you can gain real insight into yourself and your opportunities. 

Start digging deep into your values. What really matters to you will always be the biggest motivator for any action you want to take. At Spring, we know that identifying your values is vital to every aspect of financial planning, and they’re the first thing that we want to access when you are considering charitable giving. 

Your values will tell you a lot about where and why you would want to give. You might have some purely altruistic desires around giving, that have to do with people, animals, the environment, political movements, education, and much, much more. Often those kinds of desires are connected with difficult times in our own lives, or experiences we’ve had with others who have struggled. Understanding not only what potential areas of giving are meaningful to you but also why they are meaningful will solidify their importance to you, providing a solid foundation from which to make decisions. 

You may have some less altruistic desires as well. Some people get a lot of “juice” out of charitable giving. Some people prefer to give only when they know they can get a fabulous tax benefit. It doesn’t matter what the reason is, because at the end of the day, it’s your reason. Knowing your reasons, understanding why they exist, and where in priority they fit in your enormous stack of “to dos” will help you move forward with your next step…

Defining…

Now that you know your reasons, which organizations are making the most impact in the places where your values lie? How do they work? What kind of help do they really need? How would they use the money that you give? Perhaps you’ll get in touch with  a foundation – an aggregator of charities that can help you allocate chunks of your money to multiple charities. What do you need to know and understand about them before making any decisions? 

Talk to your family, or to your business partners, or your employer – anyone who is involved with you, your money, your goals, and your values. What is important to them when it comes to charity and philanthropy? Are there opportunities where your values line up, and your money could work together? 

And now… start to ideate…

If you meet with your accountant and say, “I’d like to give to charity,” your accountant will nod and then ask you a really tough question: 

“How much?”

The answer to the “how much” question should be linked to your overall financial, cash flow, and estate plans. Through the planning process, you’ll have explored your goals, your values, and your key priorities. You’ll know how much money you really want to allocate to various aspects of your life, and of course, giving will be one of them. You’ll know the dollar amount and the frequency. 

Make use of your entire financial team – your accountant, your financial planner, your investment manager, your insurance advisor – to determine the best way to make use of that dollar amount and frequency to maximize the gift and your tax credits. Each of your professionals will have some strategies that uses their expertise. Get them in a room together, to share ideas. 

Then… prototype… 

Once you and your team have developed a couple of key strategies, before you go ahead and start writing those fat cheques, have them run some models. Your accountant can estimate the tax benefits in the current year. Your financial planner can project your gifts, and their impact both on you and the charities of your choice, over the long term. 

Finally… test…

Review the models your team has run for you. Ask questions, remembering that while your team are experts in their own areas, you are the expert in you and your values. Is the outcome where you really wanted to be? What would make it better? How could you tweak these models, by giving more or less, or differently, or making use of different tools? 

We know that this feels like a lot of time to spend on a decision that many people make fairly easily, and without much thought. We know, however, that some extra time, thought, and expert support, will ensure that the decisions you make around your charitable gifts will leave a legacy that will last much, much longer than a single holiday season. 

Happy Thanksgiving from your Spring Plans team!

Julia Chung

Co-Founder, Sr. Financial Planner at Spring Financial Planning
With twenty years' experience in the financial services industry, education in personal and corporate finance, business and family law, cross border planning, family dynamics, insurance, risk management, operations management, and strategy, Julia is a powerhouse financial planner committed to simplifying complex ideas into concrete, practical application.
Julia Chung

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