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The Mindful Money team. Photo: Karolina Zapolska

This story was written and paid for by Mindful Money, a Berkeley wealth management company that is committed to a behavioral and mindful approach towards financial wellbeing.

The root meaning of philanthropy is “love of mankind,” and Americans demonstrate this annually with almost $500 billion in charity. In 2020, Americans gave $449.64 billion, with almost 70% of donations coming from individuals. One of the unexpected by-products of generosity, perhaps surprisingly, is that the giver receives benefits from giving along with the recipient of the gift. Every time we give, we also receive!

And we are not just talking about tax deductions, though charitable gifts do get those for cash and even more meaningful deductions for appreciated assets like stocks. At the core of every gift is love, and the manifesting of that love benefits the donor himself or herself implicitly.

This is hard to explain, perhaps harder to prove, but the simple act of making even a small gift to a cause or activity whose work you admire and whose objectives you share can unleash a sense of participating in and supporting something that is making the world better, rather than worse. If you do not believe us, try it.

We have distilled this article from a longer one discussing both the whys and benefits of giving, as well as the ways. Whatever your situation, we believe that you will benefit yourself — as well as others — by being generous; and we have seen the proof of this not only in ourselves but also in our clients. If you are a young professional, you should incorporate philanthropy into your life practice along with planning, saving and investing. If you are among the lucky few to have considerable windfalls and personal wealth, then you should understand how charitable giving can enhance your life and your wealth if managed correctly. And when you look at your financial success, you might be asking how it translates into significance. If so, read on.

You can give in a way that suits you best

There is more than one way to make donations. You can donate your time, your expertise and/or your financial assets or other possessions.

If you want to donate time, you can participate by volunteering. Examples might include helping to teach underserved children how to read or do math, serving as a docent at a museum or historical site, helping direct patients in medical clinics or hospitals. If you have management skills, you might serve on the board of a nonprofit, lending your expertise to further a cause or service you believe in. If you want to give financial support, you can send cash or appreciated assets like stocks.

We suggest creating a plan for your philanthropy just as you would for building your wealth, planning for the education of your children, etc. The plan should embody your values and goals. While the options are infinite, we suggest concentrating on those things you genuinely care about with a little concerted work.

At Mindful Money — the financial advisory firm Jonathan DeYoe founded and at which we both work in Berkeley, CA — participating in our community is at the core of what we do. We donate our time by serving on boards. We offer expertise to non-profit organizations by serving on investment committees and helping with capital campaigns. We donate our money by sponsoring organizations and funding projects. And if an organization decides to work with us as a client, we offer discounted fees and we recycle 100% of our profit from that relationship back into our local community.

How to set a giving budget

When you consider philanthropy, your first step will be to set a budget. If you are younger and in the early phases of your career, make charitable gifts from income if you can afford them. As you mature, and as you proceed in your career, your income will grow, hopefully, beyond expenses and beyond the amounts you have already designated to save (for a house, for kids’ schooling, for retirement, etc.). Once you have progressed to this level, you can designate part or all of that surplus for charitable purposes.

Beyond this, when you are established, have more income and more assets, you can begin considering, in special circumstances when you want to make a sizable gift, using both income and assets. When you get to that point, you will be able to make use of many tax provisions regarding the contribution of appreciated assets like stocks, for example, that save you having to pay capital gains taxes and still give you an income tax deduction. There are other vehicles, like charitable lead trusts, that can save on estate taxes.

In unusual circumstances, whatever your age, such as the windfall from an IPO or from the sale of a business, or an inheritance – however it occurs that one comes into unexpected wealth – charitable giving should come from assets as well as income. If you have a high salary and a windfall, you are likely to have a substantial tax bill and some, or much of this, can be offset by gifts to charity, enabling the government to be a partner in your giving, something the tax law incentivizes us to do.

If you have not taken philanthropy seriously before, maybe now is the time?

Identify a cause that is meaningful to you

You have finite resources — even with an IPO windfall. Start with the following questions:

  • What am I passionate about?
  • What values define my life?
  • What “good” needs to be done in this world?

Once you have those basics figured out, drill down a little deeper.

  • What specific issues, problems, challenges, populations do I want to address? This might include issues like poverty, economic inequality, problems in the legal system, combatting or curing a disease, environmental issues, global warming, etc. You may also want to focus on particular demographic groups:  the elderly, minorities, young children, animals.
  • Do I want to focus my charitable efforts locally, statewide, nationally, internationally?
  • Do I focus on one cause or more than one cause?

Think and feel out what is most important to you. What do you genuinely care about and want to involve yourself with? For maximum utility and impact, the task is to identify those high-impact charities that are making a tangible difference.

Our happiest clients – those who lead lives filled with joy and meaning – are those who have:

  • Done a comprehensive financial plan.
  • Understand the trade-offs they are embracing.
  • Are generous with their families.
  • Build philanthropic giving into their lifetime financial plans, their family conversations, and their legacy planning.

We have written this review of charitable activity in the hope that you will incorporate generosity as intrinsic to a successful life. Being generous will help you, help your family and your communities. Undertaking to change yourself in this regard will — we are certain — help to change the world for the better.

Note: If you are interested, get in touch and we can send you the complete article this is adapted from.

Jonathan DeYoe, President and Founder of Mindful Money. Photo: Courtesy Karolina Zapolska

Jonathan K. DeYoe is President of DeYoe Wealth Management, Inc dba Mindful Money, a Registered Investment Advisor. He is the author ‘Mindful Money: Simple Practices for Reaching Your Financial Goals and Increasing Your Happiness Dividend.’

David Glotzer is a Wealth Advisor at Mindful Money, a Registered Investment Advisor. He has helped clients with Charitable Remainder Trusts for over two decades, is passionate about ameliorating economic disparity, social justice and preserving the planet for his grandchildren.

You can follow Jonathan at mindful.money; on YouTube; on LinkedIn; on Facebook; on Instagram; and on Twitter.

This material is solely for informational purposes. Advisory services are only offered to clients or prospective clients where DeYoe Wealth Management, Inc. dba Mindful Money and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by DeYoe Wealth Management, Inc. dba Mindful Money unless a client service agreement is in place. Mindful Money is a service mark of DeYoe Wealth Management, Inc. a Registered Investment Adviser.