The value of volunteering: Planting seeds to grow for generations
There is little in life as noble as periodically suspending the seemingly endless pursuit of our own self-interests to serve others who perhaps are less fortunate.
Contrary to popular belief, donating your time and/or financial resources need not be an entirely selfless exercise. It’s perfectly OK to use such opportunities as a way to also benefit yourself and your family. It can, and frankly should be, mutually beneficial. An astounding 96% of volunteers reported that the action enriched their sense of purpose in life, which can also offer both mental and physical health benefits.
Volunteering with family members is a great way to instill a sense of gratitude for one’s blessings and inspire others to give to those in need. Doing so serves as a tangible affirmation of a family’s value system. Many high-net-worth individuals and families are visible pillars within their respective communities because they have proactively chosen, often over multiple generations, to give back to those in need. As a certified financial planner, I’ve had the pleasure of seeing several clients and their families take the initiative to volunteer their time together at annual events such as holiday toy drives and meal preparation and delivery at local food banks. Such family gatherings have the power to not only instruct younger generations on the importance of giving back to others but also can foster and reinforce appreciation in younger children to be grateful for what they have.
When it comes to volunteering your time, another powerful benefit comes from the sheer activity of networking — meeting new people — possibly in your current career role and/or industry. If you so choose, you can also talk about your volunteering activities with colleagues and clients or include your passion for giving back in your company’s marketing materials, such as in your corporate bio. Don’t forget: The time you spend volunteering for an organization is not tax-deductible, but expenses such as travel or parking costs may be.
The ripple effect of discussing volunteering opportunities with co-workers can be quite monumental — you never know whom you’re going to inspire!
Once you’ve found an organization you enjoy volunteering with, you can deepen your generosity by donating financial assets to them or to nonprofit institutions. Doing so may very well net you a tax write-off. Specifically, when you donate cash to a public charity, you can generally deduct up to 60% of your adjusted gross income. Moreover, appreciated assets, including long-term appreciated stocks and property, are generally deductible at fair market value — up to 30% of your adjusted gross income — provided you’ve held them for more than a year.
A donor-advised fund may be an appropriate vehicle to optimize tax savings in current and future years. Be sure to speak with a certified financial planner to learn more about their applicability to your specific philanthropic giving goals.
For those who must take required minimum distributions (RMDs), donating money from a tax-deferred retirement account such as an IRA can relieve you of otherwise having to include RMD amounts as taxable income in the year that they must be taken. Specifically, you can elect to make qualified charitable donations (QCDs) of up to $100,000 each year that are not included in your annual taxable income. QCDs can be completed starting at age 70½, a full 2½ years before RMDs begin at age 73. They can be a great way to give to others and lighten your future tax liabilities.
High-net-worth individuals and families have lots of opportunities to facilitate change in both society and the fabric of their own family dynamics. Raising compassionate kids starts with modeling and exhibiting compassionate behavior. Showing how you donate not only money, but also your valuable time, builds the foundation of a brighter and more fulfilling future for all.