When disaster strikes, our instincts turn toward helping those in need. Indeed, during the height of the COVID pandemic, generosity was ample as neighbor helped neighbor and worked within their means to support nonprofits and causes they held dear. With international warfare in Ukraine and the Middle East, many of us are compelled to help however we can.
Whether thousands of miles away or the next town over, financial support is often what's most needed and is what can most easily be provided during times of crisis.
When considering giving to international organizations, investors must be intentional to ensure that their donations are being put to work with the greatest impact for both parties. As you navigate your personal responsibility and calling, these tips can help in the months and years ahead.
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Tip #1: Don’t give haphazardly
If you’ve visited a grocery store over the past few years, you’ve borne witness to the increase of round-up donations at the cash register. Sure, a few cents here and there won’t impact your bottom line, but does it really make a big impact on the other end?
Alas, the need remains great, but the trend lines are down. According to the Giving USA 2023: The Annual Report on Philanthropy for the Year 2022, annual giving in the U.S. fell 3.4% in 2022 in current dollars and 10.5% after adjusting for inflation.
As investors weigh the benefits of transferring capital to worthy 501(c)(3)s, or those outside of the United States, they must proceed with caution. When giving internationally, it's important to determine that the organizations in question have an American Friends designation, or a U.S. affiliate of the foreign charity. The designation ensures that the organization is in good standing with the United States government and that tax benefits are accounted for on the investor side.
As with your overall investment strategy, transparency is important and due diligence reigns supreme. Give with confidence.
Tip #2: Maximize your impact
Familiar with DAFs?
Donor-advised funds (DAFs) are becoming increasingly popular as a seamless way for investors to contribute to charities in good faith, while immediately reaping the tax benefits. According to the National Philanthropic Trust, there are over 1.2 million DAFs already established in the United States. Fidelity, Schwab, Vanguard and more operate DAFs with tiered fee structures centered around AUM (assets under management).
Many employers also match donations, so it's worth contacting your HR department to better understand the philanthropic benefits that they can extend on top of your own. In times of global need, conduct some research to better understand if your dollars can go further with mega donor matching programs.
Tip #3: Consider a philanthropic strategy
Passionate gifters should work with their advisers to build a philanthropic strategy that is aligned with their values and legacy.
Taking a close look at the causes that are dear to your heart, the value of the overall impact you’re willing to make and how involved you want to be in the process are all important considerations.
A philanthropic strategy is beneficial for the gifter, as well as the charitable organization. These charities need funds all year round, not just around the holidays or when disaster strikes. Creating a strategy can ensure your funds are being maximized, and you are also benefiting from a tax perspective.
If you have questions about reputable organizations to donate to, look to trusted sources like GuideStar or Charity Navigator to better ascertain their credibility and accountability standards.
The bottom line
Is it wrong to want to give one-off donations? No. But if you want to make a bigger impact, think more strategically.
Smart, targeted grants to international organizations and on a long-term basis can change the way the world operates. We’re seeing it in real time. Ensure that your charitable giving is working for you, not against.
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