When you think of charity, what comes to mind? Do you think of non-profits – organizations taking on major challenges and trying to make a difference? True! Many charitable contributions aim to give from your resources to fund groups who seek to meet the needs of others – and, as an incentive, you usually get a tax deduction for your contribution! But what if we simply define charity as giving to those in need? This opens a new world of philanthropy many find brings deep fulfillment and makes a difference. We call it Person-to-Person Charity.
What is Person-to-Person Charity?
Person-to-person charitable acts aim to meet the needs of people in your own community, creating a direct connection that some find even more fulfilling than writing a check to their favorite non-profit.
This could mean buying groceries for families that cannot afford them, picking up the vet bill for a friend’s injured pet or helping a single parent pay for childcare. By focusing on individual, hyper-local efforts, person-to-person giving can make a bigger difference in the lives of those in your immediate community.
Meeting Needs and Building Connection
In a 2015 TED Talk about addiction and human connection, Johann Hari posits that our culture suffers from a lack of personal, face-to-face connection, perhaps more than anything else. It’s a fascinating talk, if you haven’t seen it.
Person-to-person charitable acts are perhaps the best way to meet both the financial and personal connection needs of those around you. It is, in a sense, an example of the old being made new again. In an increasingly digital age, many people miss the compassion and care that neighbors once regularly showed each other.
While charities typically do a good job of humanizing the gift, giving directly to someone in your community builds a relationship and expresses genuine compassion that is simply unmatched. It says, “I see that you have a need, which is important to meet because you are important.” In that sense person-to-person charitable acts are a way of not only meeting needs but also restoring dignity to those that are less fortunate.
Person-to-Person Charity in Action
In a discussion with a new client about her goals, she said very plainly, “You know, if I knew exactly what I needed to take care of myself, I would give everything else away today.” What a vision! We started with a plan to create the income she needed and plan for contingencies. Then, we moved on to what she really cared about. We talked about charitable organizations and causes she cares about, but quickly realized she had something very different in mind. She would make periodic gifts to local charities but was focused on directly meeting the needs of people in her community. She told us that one particularly rough economic year, she and her family went to the director of a mobile home community near them during the holidays and made an anonymous donation to catch up everyone who was behind on their mortgage payments. They did not know all the residents in the mobile home community, but they heard the ripple effect throughout their local community. Calculating the tax deduction implications was not important to them and they were not looking for any recognition or benefit for themselves. She simply had a heart to help those in need and the extra resources to make it happen.
Another example of a person-to-person charity that has been making news headlines lately is the 2020 tip challenge. In celebration of the new year, people all over the country are bumping up their gratuities on bills while dining out and leaving tips of $20.20 on their bills. Some celebrities, like Donnie Wahlberg, have raised the bar even further by leaving tips of $2,020 as a thank you! They recognize the hard work of local servers, who typically work long hours and may not be used to the type of recognition they often deserve.
Person-to-person charity comes with a lot of upsides, but it’s not without cost. These kinds of charitable acts are not tax deductible. Tax deductions certainly aren’t the only reason people give, but it sure is a nice perk.
As discussed in Can You Gift Too Much?, you’ll also want to consider IRS annual gift limits. In 2020, gifts above $15,000 per recipient reduce your lifetime estate tax exemption. Look at your situation with your advisor or tax professional.
More importantly, it usually means being engaged in your community, which is not solely a financial gift – it often blends investment of your money and your time. In a world of social media, email, blogs and Netflix, direct community involvement has suffered. For extroverts, this may be a non-issue…you love meeting people! But for the introverts who prefer a good book to a big party, person-to-person charity can be for you, too! We’ve heard many stories of folks anonymously meeting needs they hear of in the community. You might even know the person already but find it uncomfortable to give them money directly.
Despite the costs, person-to-person giving can be one of the most powerful forms of charity.
Charitable Planning and How to Incorporate a Person-to-Person Approach
Good charitable planning, including person-to-person giving, involves three steps.
- Determine Your Own Needs. Understanding your family’s existing financial needs provides a starting place for looking at charitable giving options. Figure out how much you need of what you have and then start thinking about how you can create enough security to give charitably without the fear of becoming a burden on someone else.
- Identify Essential Gifts. Specify any gifts that you already know you will want to make to family, friends, or your community. These are the big pieces that you will want to structure your other charitable giving around.
- Define Charitable Giving Priorities and Goals. What kinds of impacts are most important to you? Are you motivated by making the biggest impact possible on a single cause or non-profit? Or are you drawn more to person-to-person gifts to family, friends and your local community? Like many, you might find you’re a blend of both. Decide what you hope to accomplish through charitable giving and how involved you want to be. These goals give you a target to remain focused on and a way to measure your impact.
This is among our favorite topics – we love helping clients expand the reach of their charitable vision! A professional advising team can walk through these steps with you, set aside enough to provide your family and maximize the dollars you commit to causes you care about, whether on a national scale or right in your own backyard.
The “Alterra” name was coined by joining the Latin roots “alter”, the origin of the word “altruism” with “terra” meaning earth or land. This name reflects the company philosophy of “clients before profits” and providing firmly grounded advice.