The Joy of Giving Back to Community

Can money buy happiness?

The relationship between wealth and joy isn’t straightforward. Higher incomes are generally associated with a gradual increase in happiness, but some research suggests it may plateau around the point at which one’s basic needs have been met, with that ceiling determined to be about $75,000 a year, per a 2010 study.

Additional research has shown that prosocial spending, or spending on other people instead of yourself, and being involved in community activities can serve as a potent avenue for discovering purpose and significance in our lives. By engaging in activities that help others, we can gain a sense of accomplishment, pride, and belonging, all of which can lead to higher happiness levels.

There are countless ways to contribute to your community, and each can have a unique impact on your well-being as well as the lives of those around you. Whether it be volunteering your time at a local charity or organization, or donating money or resources to support community initiatives, each act of generosity can create a ripple effect of positivity in your community.

Key Takeaways

• Research suggests that giving back to your community by donating to causes that resonate with you and align with your values can boost your happiness, reduce stress, and bring a sense of fulfillment.
• One of the challenges charitably inclined individuals face on #GivingTuesday is the pressure to make quick decisions about where and how much to donate.
• Donor-advised funds (DAFs) are charitable giving accounts that allow individuals to make tax-deductible contributions, receive an immediate tax benefit, and then recommend distributions to their chosen charities over time.

The Power of Giving Back: How Helping Others Benefits You

Research on the relationship between time, money, and happiness suggests that individuals who actively contribute to their communities through causes that align with their values and interests often experience increased happiness, reduced stress, and a greater sense of purpose.

This research emphasizes the importance of thoughtful decision-making. One of the challenges individuals face on Giving Tuesday (which falls each year on the Tuesday after Thanksgiving) is the pressure to make quick decisions about how much and where to donate.

DAFs offer a solution to this call to timely action. With a DAF, you can make a charitable gift now, potentially receive a charitable tax deduction in this calendar year and then request distributions to specific organizations in the future when you’ve had time to research and make informed decisions.

DAF charitable assets represent 20% of those in private foundations, according to National Philanthropic Trust’s 2023 annual report. The average size of individual donor-advised accounts was an estimated $117,466 in 2022, down 3.8% from $122,162 in 2021.

Positive Features of Using Donor-Advised Funds to Make Charitable Contributions

• Tax Advantages: Contributions to a DAF can be tax-deductible in the year they are made, enabling donors to plan large gifts and to potentially lower their taxable income.
• Ease of Use: DAFs are straightforward to set up and manage. Many DAF sponsors provide online platforms that make it easy to recommend grants to charities, track contributions, and view fund activity.
• Simplified Giving: Donors can typically make a single contribution to their DAF and then recommend grants to multiple charities over time. This simplifies the giving process, reducing paperwork, and simplifying record-keeping for tax and financial purposes and other administrative burdens.
• Flexibility: Donors can usually contribute to a DAF at any time and in various forms, such as cash, securities, or other assets. This flexibility allows individuals to make contributions when it’s most advantageous for their financial situation.
• Strategic Giving: DAFs enable donors to plan and strategize their charitable giving. Donors can take their time to research and identify organizations that align with their values and philanthropic goals before recommending grants.
• Diversification: Donors can diversify their philanthropic efforts by supporting a wide range of charitable causes and organizations through a single DAF.
• Compliance and Due Diligence: DAF sponsors conduct due diligence on recommended grant recipients, helping to ensure that funds are directed to reputable and qualifying charitable organizations.
• Investment Growth: DAF contributions are typically invested, allowing them to potentially grow over time and increase the impact of their charitable giving.
• Privacy: DAFs can provide a degree of anonymity for donors who wish to keep their charitable giving private. When a grant is made from a DAF, the recipient charity receives the grant from the DAF sponsor who can withhold the giving account holder’s name, if requested.
• Legacy Planning: DAFs can be used as part of an estate planning strategy. Donors can name successors to continue recommending grants from the fund after their lifetime, ensuring a lasting charitable legacy.

The AMG Charitable Gift Foundation

DAFs like the AMG Charitable Gift Foundation offer a practical solution that aligns with research on better using our time and money to boost our happiness. DAFs empower individuals to give thoughtfully, consider their values, and plan distributions to charitable organizations that align with their mission and goals.

Advantages of AMG’s Charitable Gift Foundation:

• Easy setup and $5,000 initial contribution minimum.
• Contributions may be made with various types of securities and may be eligible for an immediate tax deduction.
• Funds grow tax-free in professionally managed portfolios until distributed.

On #GivingTuesday especially, the strategic use of DAFs can not only maximize the impact of charitable contributions but also harmonize with individual happiness and values, fostering a more fulfilling and purposeful giving experience.

They also can provide tax benefits, flexibility, ease of use, and can be a valuable tool for those interested in planning their charitable legacy while engaging with the charitable community.