Principle #7: It’s not about impressing the IRS

Principle #7: It’s not about impressing the IRS

Our company is founded on the Sound Stewardship Principles: time-tested guidelines for long-term financial success. Today, we finish our series by looking at the final principle: Give Generously.

We weave Sound Stewardship’s 7th principle, Give Generously, throughout our entire financial planning process. Whether it’s annual giving, regular donations, spontaneous gifts or including charities in estate planning, generosity is a recurring theme in our client conversations.

We help the clients we serve ask themselves, “How do I want to use the resources I’ve been given to bless others?”

In fact, we set up our firm so that we could freely support our clients’ generosity. Our flat-fee structure means there’s no conflict of interest when it comes to charitable giving; our compensation isn’t tied to how much you keep or how much you give away. We want to support your efforts to give—with no judgment or cajoling.

It’s not about impressing the IRS

In the past, the federal government has rewarded Americans for making charitable donations through itemized deductions. In fact, with the new tax law, it expanded your ability to deduct 60% of your income instead of 50% for charitable donations. However, the new tax law raised the standard deduction so high that upwards of 90% of Americans may not be itemizing.

At Sound Stewardship, we encourage our clients to continue giving generously, just as they were before the tax law changed. We don’t believe in giving to impress the IRS or solely for tax reduction purposes. Instead, we support our clients who feel led to give because they believe God owns it all and He calls us to be generous with His resources.

Called to give

Generosity is one of the most important themes in the Bible.

Proverbs 3:9-10 reads, “Honor the LORD with your wealth, with the firstfruits of all your crops; then your barns will be filled to overflowing, and your vats will brim over with new wine.” (NIV)

In the New Testament, Luke records Jesus saying, “It is more blessed to give than to receive.” (NIV).

People who believe in this timeless wisdom know that giving has been practiced completely independent of federal tax returns for thousands of years. We give as an act of worship, regardless of the tax benefits. We also give because it’s a universal truth that giving is good for us.

The benefits of giving generously

We’ve seen the benefits of giving play out in our lives (and our clients’ lives) in four distinct ways:

  1. Spiritual: Aligning your financial life with your spiritual beliefs can give you a sense of peace and contentment.
  2. Wellness: New studies show that giving can improve both physical and mental health, including reduced blood pressure and lower rates of depression.
  3. Communal: Supporting local charities not only builds a strong community but it has a ripple effect as well: Your philanthropic leadership can inspire others to give.
  4. Generational: Intentional giving models generosity for the young people in your life and grows the next generation of philanthropists.

How should we do generosity?

Generosity isn’t something that happens by accident—especially in our culture! (Did you know the average American only donates around 3.7 percent of their income?) So we need to take a proactive approach.

In our very first meeting with a prospective client, we’ll ask them a pretty fun question: What if you had $1 million to give away? What charities would you like to support? What causes would you back? Or create? This gives us an idea of who they are passionate about and want to support.

Then we’ll look at what they actually possess to give away. What’s their current capacity to support those philanthropic passions?

The most common capacity question we encounter is when a client retires. They may have been used to giving 10 percent of their income, but now they don’t have a regular paycheck coming in. We help our clients figure out how to maintain their current levels of generosity in their new post-retirement circumstances, whether that’s giving 10 percent of their dividends, investment appreciation and/or IRA distributions. Your capacity will change throughout your life; we’ll help you adjust as we go.

Finally, we’ll develop a plan for how to give. We’ll create a strategy for your charitable goals, so you’re giving in the most effective way. We’ll also make sure to include your charitable wishes within your estate planning, so you don’t miss out on your biggest giving opportunity of all.

Are you interested in weaving generosity into your financial plan but don’t know quite where to start? Get in touch with one of our Sound Stewardship Wealth Advisors. We’d love to help you make an impact on the charitable organizations you care about the most.

Read more:  

Principle #1: The means to financial freedom
Principle #2: Avoid debt
Principle #3: Build an emergency reserve
Principle #4: Have a long-term plan
Principle #5:  Stay afloat with diversification
Principle #6: What are you waiting for?

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