How to Build a Charitable Giving Strategy Into Your Financial Plan

By Emily Green

Charitable giving is at the top of many people’s minds this time of year — there’s lots of fundraising going on, lots of emails with requests to donate, Giving Tuesday, end-of-year tax deadlines, and the holidays. And the good news is that charitable giving is on the rise: It was up 9% last year, and it’s risen a whopping 19% over the last three years.

An illustration of a circle with a heart inside, outlined in different colors to represent all the places you’ll be giving in a year.

The power of philanthropy can change lives. But with so many different deserving causes out there, it’s only natural to wonder whether you’re making choices that are right for your values, your time, and your overall financial plan. That’s where making a charitable giving strategy can really help.

What’s a charitable giving strategy?

Some of your giving will be highly intentional, to support the causes and organizations you’re passionate about. And some of it is reactive giving — things like direct requests from organizations, social obligations, and in-the-moment generosity. Think about your friends asking for their causes, or the one-off responses for things like disaster relief.

A strategic giving plan is a simple, high-level framework that lets you connect your most important values to your donations. Using your values as a guide not only helps you see clearly where you want to direct your philanthropic giving throughout the year, but also helps you make decisions when those reactive giving opportunities come up. You’ll have a way to look closely at each opportunity and match it to your plan so you can stay on track.

How to make your charitable giving strategy

Your strategy can be as detailed as you want it to be — some people like to set monthly or annual donation targets, while others work well with just a few clear priorities to make giving decisions on the fly. No matter the level of detail, creating your strategy should follow the same approach. We worked with Jeannie Sager, Director of the Women’s Philanthropy Institute, to outline six steps you can use to create your strategy.

1. Decide on your values and concerns

The first step is to think about all the values you have. Do you care about justice? Tradition? Hard work? Equality? Interdependence? Compassion? Thrift? List out all the important values you can think of.

Then do the same thing with the concerns that are most important to you: gender equality? Climate change? Prison reform? Art? The Women’s Philanthropy Institute created a worksheet with lots of sample values and concerns you can use as a starting point — download it here.

Next, prioritize: Which three values and three concerns are most important to you right now? This is hard — but it’s critical in setting your plan up for success. If it feels impossible, try these techniques:

  • Think about which causes and concerns you donated to over the past year. Which ones made you feel great, and which ones hurt? (That pain is a good sign you gave out of obligation rather than passion.)

  • Look at the charters of the organizations you care deeply about. They tend to list their own values there, which can help you decide which ones matter most to you.

  • Download this list of questions to ask yourself from the Women’s Philanthropy Institute to examine not only your values but also where you want to make an impact with your giving over your lifetime.

  • Remember that this plan is just one year and that you have more years of giving ahead. Your priorities might change in the future, and the amount you can give might, too. 

2. Decide how much you want to give, and how

Once you’ve reviewed your financial plan and decided on an overall budget, then you’ll want to think about how you want to allocate your donations this year. There are a couple of ways you could look at it strategically.

With the 80/20 rule, you’ll give 80% of your giving budget to those causes and orgs you’re deeply connected to, and reserve 20% of it for reactive giving. You can tweak this ratio if you connect reactive giving back to your most important values; for example, perhaps you value creating community or solidifying connections via giving. But the idea is to direct the majority to giving intentionally, rather than reactively, so you can have a bigger impact on the things you care about most.

Expanding on this idea, Jennifer Alcorn, the deputy director for Philanthropic Partnerships at the Bill & Melinda Gates Foundation, shared her advice to givers in the wake of a pandemic. She suggested the following strategic division of your annual giving budget:

  • 40% into long-term investments focused on systemic change. That means situations such as systemic racism or climate change. 

  • 20–30% into relieving immediate needs, such as abortion funds or food banks.

  • 5–10% to respond to asks from friends and family, or unanticipated fund-raising events.  

  • And then 10–20% for the gift obligations that you commit to each year, like alumni giving or your kid’s school.

3. Expand your definition of “giving”

One of the challenges of deciding on priorities is leaving something out. But philanthropy isn’t just money. The next step as you make a strategy is think about the work you’d like to do beyond pure monetary gifts. Sager says that it can help to see this work as “the four T’s.”

  • Time. Sharing your time quite definitely counts as giving. You can add it in as a dollar amount with your hourly pay rate in mind, or as a number of hours per month or year you’ll aim to contribute.

  • Talent. What are your areas of expertise? How do you think you can share them philanthropically this year?

  • Testimony. Your voice matters. Advocating and sharing direct asks and the overall mission and cause of orgs you care about can have powerful effects, as those you share with do the same with their own networks. Write down how you’ll commit to amplify and advocate this year.

  • Ties. Can you make connections or introductions? Can you come together with other people to increase your overall impact together? Seventy percent of giving circles have a majority of women members — and coming together to create a collective impact could be an excellent thing to do with friends this year, as most social events are canceled. Think about the ways you’ll use your ties, then put that in your plan, too.

4. Explore your values with your family

Once you’ve done the work on your own values and budget (including the value of your four T’s), it’s a good idea to come together with your family to share your thinking and discuss it together. This is a great conversation to have with any family member, and it’s key if you’ve got kids at home — especially daughters. Research from the Women’s Philanthropy Institute shows that modeling parental philanthropy is linked with a 3.6% increase in sons’ likelihood of giving when they get older, but a 12.9% increase in daughters’ likelihood of giving. 

You can share your values exercises and have the kids do it themselves. Also consider setting aside some of your donation budget as a pot of money you decide to give together — weighing in on how you direct your donor-advised funds can be a great tool to start kids with charitable giving. You can also give children another pot that they can give themselves (with your help) to experience the decision-making process early.

The holidays are an excellent time to have these conversations — not only because it’s a chunk of time you’ll have together, but also because you’ll have an opportunity to connect gratitude with the act of giving.

5. Plan when you’ll donate

Charitable organizations know that the end of the year is when most donations come in, and that’s a fine way to look at it. But you can also consider spreading your giving out across the year. Creating a monthly sustaining gift can help organizations in terms of operating strategy and regular expenses like payroll.

Another reason to give more frequently: That study about modeling generosity and transmitting philanthropy also found that seeing parents give frequently makes a difference to children, especially daughters.

Then there’s philanthropy beyond just this year. Charitable giving belongs in your financial plan more broadly, whether that means establishing a donor-advised fund for tax purposes or talking to a financial advisor about how much you want to be able to donate each year in retirement or include in your estate plan.

6. Put it all together, then revisit your charitable giving strategy regularly

The last step is to write down your full strategy, including the orgs you want to support, your top priorities, and when / how often you want to give. The Women’s Philanthropy Institute has an easy and really helpful template you can work from.

Once you’ve made your plan, you should come back to it at least once a year. You’re going to want to review your previous giving, see whether you stuck to your intentions, and check in with yourself to see if your values have changed.

Tax time is a good time to do this work, because you’ll be going through your receipts, and you’ll find out whether or not you stuck to your strategy. That gives you an automatic, annual level of accountability.

First, check in with your values. Has anything changed over the last year? Priorities can shift due to current events; this year definitely had a lot of people re-examining their values and priorities. Look over your reactive giving. Does it point to something you value and want to give more to in the long term? 

Next, take a look at your overall strategy. Did you stick to the overall plan and allocation? If not, what got in your way? How can you recalibrate the strategy next year?

As your life changes, your ability to give will naturally evolve as well. Ask yourself whether you feel ready to give more or want to give less than you have been doing. It might be time to move to another phase of your 20-year plan, or you might be great with the same strategic giving plan that worked last year. Whatever you decide, you can know that you’re giving intentionally to maximize your impact.

Sources and Disclosures

© 2020 Ellevest, Inc. All Rights Reserved.

Sources of claims of fact: the recession has hit women women hard; 2020 increases in grants; racial justice giving; donations to George Floyd’s family; collective action; 70% of giving circles are majority women; research on modeling parental giving; pandemic reduction of funds to non-profits.

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Emily Green

Emily is a financial advisor on Ellevest’s Private Wealth Management team, working with clients to help them develop personalized long-term investment plans that align with their goals and values.