By Brandon Miller–
Gift-giving activates key reward pathways in the brain, especially when giving to someone close to us, according to Emiliana Simon-Thomas, PhD, from the Greater Good Science Center. While both giving and receiving gifts can yield similar brain responses, giving often feels uniquely rewarding because it involves sacrifice and demonstrates care, making it truly special when done thoughtfully.
Studies show that spending money on others promotes happiness, triggering brain areas linked to social bonding and pleasure. This effect, often called the “warm glow,” is enhanced by oxytocin, the “cuddle hormone,” which fosters trust and connection, making the joy of giving longer-lasting than the fleeting dopamine rush of receiving.
Lucky us, ’tis the season to spread some cheer! In 2022, charitable giving in the U.S. soared to an incredible $499 billion—more than the GDP of some countries! While donations dipped slightly post-pandemic, the spirit of giving remains strong, with individuals leading the charge.
Being generous is a gift not just for others, but also for yourself. Beyond the warm fuzzies of kindness, giving offers tangible rewards, from tax benefits to fostering connections. So, channel your inner Santa and the magical rewards of giving.
Embracing the joy of charitable giving can bring fulfillment, strengthen communities, and even add a little sparkle to your financial planning. Here’s why so many embrace the joy of giving:
Personal Connection: Your giving can support causes close to your heart. Love animals? Donate to a shelter. Know someone facing a health challenge? Support research efforts in their honor.
Building Community: Santa brings people together, and so can your donations. Whether helping a local food pantry or volunteering at a shelter, your efforts foster connections and create a stronger, more caring community.
Family Bonding: Giving is a family affair! Charitable giving can bring your loved ones closer. Establishing a family tradition of giving can create lasting memories and a legacy of kindness.
Spreading Joy: Studies show that giving makes us happier. Donating to meaningful causes can boost your happiness over time. Not only does being charitably inclined make you feel good, but it also has some pretty nifty benefits too.
Lower Your Tax Bill: Donations to qualified charities can reduce your taxable income—up to 60% of your adjusted gross income (AGI) for public charities and 30% for certain private organizations. Excess donations? Carry them forward for five years!
Shrink Your Taxable Estate: Strategically gifting assets reduces your estate’s size, potentially saving on estate taxes.
Avoid Capital Gains Taxes: Got highly appreciated stocks? Gifting them to charities avoids capital gains taxes and maximizes your impact.
Not sure how to start your giving journey? Here are a few Santa-approved ideas:
Annual Gifting: Set a yearly giving goal. Even better, work with an advisor to identify the best assets to donate, like low-cost-basis stocks.
Family Philanthropy: Create a donor-advised fund or private foundation to involve your family in spreading holiday cheer year-round. Donor-Advised Funds are easy to maintain and flexible, with immediate tax benefits. Private foundations, on the other hand, can facilitate larger-scale giving with more control (and a bit more responsibility).
Qualified Charitable Distributions (QCDs): Retired? Use your IRA’s required minimum distribution to gift up to $105,000 annually to charity without boosting your taxable income.
Charitable Trusts: Combine income generation with charitable goals. A charitable remainder trust lets you receive income while leaving the remainder to charity, while a charitable lead trust works in reverse.
Check Your Giving List Twice: Just like Santa verifies his list, do your homework to ensure your chosen charities are effective, financially sound, and eligible for tax-deductible donations. Working with an advisor can help you optimize your giving strategy, making the season of giving last all year long.
The opinions expressed in this article are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security. It is only intended to provide education about the financial industry. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. Any past performance discussed during this program is no guarantee of future results. Any indices referenced for comparison are unmanaged and cannot be invested into directly. As always, please remember investing involves risk and possible loss of principal capital; please seek advice from a licensed professional.
Brio Financial Group is a registered investment adviser. Advisory services are only offered to clients or prospective clients where Brio Financial Group and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Brio Financial Group unless a client service agreement is in place.
Brandon Miller, CFP®, is a financial consultant at Brio Financial Group in San Francisco, specializing in helping LGBT individuals and families plan and achieve their financial goals. For more information:
https://www.briofg.com/
Money Matters
Published on December 19, 2024
Recent Comments