| ||||||||||||
The holidays are upon us, that wonderful time of year when we celebrate traditions, gather with loved ones, and take time off to recharge. It is perhaps not surprising that the season of goodwill, when we pause to reflect on our many blessings, is also a popular time for giving back.
Through charitable donations, volunteerism, and participation in fundraising events, we show up for our neighbors in need.
According to Giving USA, individuals, bequests, foundations, and corporations collectively gave an estimated $500 billion to U.S.-based charities in 2022, resources that were (and still are) badly needed as inflation puts added pressure on household budgets. Additional research reveals that nonprofits raise roughly one-quarter (26 percent) of their annual revenue in the month of December.1
The good news is you need not drain your bank account to bring a little light to the world.
“Everyone can make an impact with what they have,” said Kelli Kreps, executive director of NeighborShare, a partner and grantee of the MassMutual Foundation. “There are so many wonderful organizations doing terrific work. A relatively small sum of money can have an outsized and immediate impact on real households in need.”
Looking for ways to turn gratitude into action this holiday season – and year-round? Here’s how:
Make a cash donation
Cash donations to humanitarian nonprofits can help provide basic necessities for families experiencing financial hardship. Funds donated to medical research organizations help support the important work being done to find new treatments. And animal rights and environmental protection groups abound, all of which welcome online donations.
Many charitable organizations also enable donors to make online gifts that directly support programs and services in their hometown. NeighborShare takes community giving one step further, allowing donors to search by location and browse through stories of individuals (identified by first name only) who need financial assistance. The ask is often for small contributions of $10 to $50. Some neighbors simply need new work boots so that they can start a steady, well-paying job or a few extra dollars to cover their heating bill after a short-term illness prevented them from earning a paycheck. Others are single mothers who may need help with groceries or child care expenses after leaving an abusive relationship.
“We are working through trusted nonprofit partners on the ground to index individual, vetted micro-moments of need, providing a transparent mechanism to help neighbors avoid a crisis, maintain stability, or take a meaningful step forward,” said Kreps.
For others, donating in person to organizations that support their local community helps bring meaning to the holiday season. Schools, religious institutions, and food pantries often host canned food, coat, or toy drives, which makes giving back easy and offers an excellent opportunity to get your friends and family involved.
To ensure that your donated dollars get put to the best use, CharityWatch maintains an online database of top-rated charities that spend at least 75 percent of their budget on programs that meet the benchmarks for governance and financial disclosure. To supersize your donation, always check with your employer to find out if they offer charitable benefits. About 26 percent of companies grant employees paid time off for volunteering, while others (mainly larger employers) offer to match employee donations to an eligible nonprofit up to an annual limit, according to the Society for Human Resource Management.2
Volunteer
Generosity, of course, need not involve dollar signs. Even a few hours spent distributing meals, stuffing backpacks with school supplies, or repairing homes for those experiencing financial distress can have a major effect on your community.
Habitat for Humanity and Points of Light, to name just two, rely on helping hands to bring stability and independence to households in need.
If you have children who are old enough to pitch in, consider including them. New research found that volunteering through school, a religious organization, or a community group is associated with better parent-reported overall health and wellness among children and adolescents, including better physical health, fewer behavioral problems, and lower odds of anxiety in adolescents.3
Skills-based volunteering is another valuable way to give back and one that many nonprofits sorely need. Accountants might offer to manage the books for the local food bank, while marketing professionals could oversee a nonprofit’s social media strategy. Others trained in information technology (IT) might offer free consulting services to a cause they care about.
Similarly, those handy with a sewing machine could make blankets for their local animal shelter, gardeners might grow food for the community pantry, and mechanics might help to keep delivery trucks running smoothly.
Remember, your volunteerism doesn’t have to be limited to the holiday season. It’s already a hectic time of year. While you're decorating the tree or lighting the menorah, discuss as a family which charity your family would like to support and put your commitment on the calendar (in writing) for later in the year. The conversation alone helps to establish giving back as a family priority.
Lower your taxes through charitable giving
Charitable donations can be a win-win, especially for higher income households looking to reduce the size of their taxable estate. Financial professionals who contribute to the MassMutual blog have clients who've considered the following philanthropic strategies:
- Donate appreciated stocks or securities to a qualified charity. You may be eligible to deduct the fair market value of your donation. You may also be able to donate up to $100,000 to a charity tax-free each year through a qualified charitable distribution (QCD).[4] For those at least age 73, QCDs count toward their required minimum distribution (RMD) from their IRA, which may reduce the taxes they owe. RMDs are normally taxed at the ordinary income tax rate, up to 37 percent for the highest income households in 2023.
- Use cash value life insurance to meet your charitable objectives. You may be able to designate a charity as the beneficiary of a permanent policy, such as whole life. As the donor, you could potentially retain ownership of the permanent life insurance policy and have access to its cash value during your lifetime. If you no longer need your permanent life insurance policy, you could instead change the ownership and beneficiary to the charity, which, under certain circumstances, may provide an immediate tax donation assuming the cash gift is to a qualified charity.
- Consider a trust, which may help facilitate tax-friendly giving. Charitable remainder trusts and charitable lead trusts, both of which are types of irrevocable trusts that require the grantor to surrender control of the assets placed inside the trust, can potentially generate an income tax deduction and help mitigate estate taxes. But trusts can be costly and complex.
It is important to consult a tax or financial professional before making any significant decisions involving your financial assets.
Giving back can light a spark
It takes very little to light a spark. Even a single donation or afternoon spent volunteering can make a meaningful impact on your community. This holiday season, as you celebrate with friends and family, consider the myriad ways you can give back and inspire others to take action. Remember: Change begins with you.
Discover more from MassMutual…
5 tips on how to reduce taxes in retirement
Supporting your alma mater: 3 life insurance moves
Need a financial professional? Find one here
1 M+R, “2023 Benchmarks Report,” May 30, 2023.
2 Society for Human Resource Management, “2019 Employee Benefits Survey,” June 25, 2019.
3 JAMA Network Open, “Volunteering, Health, and Well-being of Children and Adolescents in the United States,” May 30, 2023.
4 Internal Revenue Service, “Qualified charitable distributions allow eligible IRA owners up to $100,000 in tax-free gifts to charity,” Nov. 16, 2023.
