One major reason for charitable giving is personal experience with an organization. But if you don't have a personal connection and don't have time to research the charity, there is still a way to make a contribution today and get the money to your cause when you're ready.
A pilot program of The Next Generation Venture Fund is a charitable initiative recently set up by the Goldman Sachs Foundation, Duke and Johns Hopkins Universities.
Yet, as with many of the 850,000 non-profits — largely supported by charitable dollars — potential donors may know little about it.
But that doesn't mean you can't make a charitable contribution before the end of the year. One way to get a tax deduction on your donation now and to think about where you want to give the money later is to set up a donor advised fund.
"It allows donors to be more contemplative and responsible in their choices because they can do research," said Kim Wright-Violich, who works for Schwab Fund for Charitable Giving. "They can sit on the board. They can volunteer and then really make a good decision about what they want to support."
Here's how it works:
- Your donation is set aside in an account that is usually managed by a community foundation or a financial services firm.
- The assets are invested and grow tax free since they are charitable dollars.
- Then, you can recommend grants from the account at any time to any eligible public charity.
"In February, when things are a little more relaxed and less hectic after the holidays, you can say 'I want so much to go to the Red Cross, so much to go to this charity and so much to go to these other charities,' " said Randi Schuster of BDO Seidman. "It gives you a little more flexibility."
Minimum contributions usually start between $10,000 and $25,000, either in cash or appreciated stock.
The interest in donor advised funds has grown in recent years, surpassing the number of private foundations in 2002.
This latest trend in charitable giving owes thanks, in part, to the stock market's rise.
"Most of the affluent and emerging affluent give appreciated securities because they can avoid capital gains tax in addition to getting a charitable deducion," Wright-Violich said.
While that's usually the reason for giving this season, investing in a charity — like a business — may also come down to your bottom line.
Additionally, once you've put your money in a donor advised fund, you can't take it back. It goes to a public charity just like any other donation.
So when it comes to the giving season, how much do the affluent usually give?
According to "The Millionaire Mind," Americans whose net worth is between $1 million and $5 million give about $15,000 a year. Those worth about $5 million to $10 million give around $65,000 annually, and the extremely wealthy worth between $10 million and $20 million give $250,000 a year.