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An 8-Step Approach for Impactful Giving

Many individuals' wealth comes with the ability to create thoughtful and impactful change for others. However, making the foundation for impactful giving requires strategic planning and understanding how to transform their assets into lasting legacies. With a comprehensive approach, giving-minded individuals can skillfully transfer their assets into an enduring legacy that impacts communities and causes they care about.

This outlines how individuals can use an eight-step approach to engage in thoughtful and impactful giving that transforms assets into positive change.

Begin with a Strategic Giving Plan

The path from assets to impactful legacies must always start with a strategic giving plan. Strategic planning aligns your vision, values, and financial capabilities with your philanthropic objectives. It requires you to identify the causes that resonate with your core values, set clear goals around those causes, understand the resources you can dedicate to these goals, and establish metrics to assess the impact of your contributions.

Implement Donor-Advised Funds

Donor-advised funds (DAFs) have become a widely used giving strategy for their simplicity, flexibility, and tax advantages. DAFs are philanthropic vehicles administered by public charities that allow donors to contribute, receive an immediate tax deduction, and recommend grants from the fund over time.

Rely on professionals

Engaging with financial, legal, and tax professionals specializing in philanthropy can help individuals navigate the complex terrain of strategic giving. These professionals offer valuable guidance in crafting effective giving strategies, identifying worthy causes and organizations, and measuring the impact of your philanthropy.

Engage in Grant-making

An effective way to help ensure assets translate into impactful legacies is through effective grant-making. This process involves donating funds to nonprofit entities that align with one’s philanthropic goals. It's vital to vet the organizations thoroughly, which includes understanding their mission, operational efficacy, and the results they have achieved with previous donations.

Utilize an impact investing strategy

Impact investing is a strategic, sustainable, and market-driven approach to philanthropy. Impact investing allows individuals to invest in businesses or projects that generate a financial return and a social or environmental impact. Impact investing will enable donors to sustain and grow their assets while contributing to positive societal change.

Consider a family foundation.

Establishing a family foundation can be a powerful way to align your family's values with your philanthropic objectives. It provides a structured framework for managing, growing, and distributing wealth, all while allowing the family to work together towards common charitable goals. Family foundations also offer an excellent opportunity to educate younger generations about wealth management and responsibility.

Establish a Charitable Trust

A charitable trust is a legal entity that uses donated assets, such as stocks or real estate, to benefit causes that benefit the public. Charitable trusts may have some tax benefits but may only be suitable for some donors as the tax deduction is limited for most. Financial, tax, and legal professionals can help you understand how a charitable trust works and if it is an appropriate strategy for your situation.

Estate Planning and Legacy Giving

Legacy giving involves making a significant charitable gift during a donor's life or death as part of their overall financial and estate planning strategy. This method of giving allows you to support causes and organizations close to your heart and provides tax benefits that can help preserve more of your estate for your heirs.

In conclusion, transforming assets into lasting and impactful legacies requires thoughtful planning and strategic execution. The various options available—strategic giving plans, grant-making, impact investing, family foundations, charitable trusts, donor-advised funds, and legacy giving—provide numerous strategies for charitable giving.

By working with financial, legal, and tax professionals, individuals can create a plan for thoughtful and impactful giving that creates positive change, personal fulfillment, and a lasting legacy.

A financial advisor with a fiduciary duty provides this commentary and serves individuals and families across Arizona.

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