Gina didn’t want to just give money to charity. She instead wanted to be involved. She wanted a hand in, indeed two hands in and maybe both feet, too. Gina’s trouble was that she didn’t see a charity in her area that was doing the charitable work that she believed needed doing. And she couldn’t interest any existing charity in helping her to do that needed work. Each charity she contacted had its own mission and programs, and none were willing to extend their mission, reputation, and resources to address the charitable need Gina so clearly saw. And so Gina finally resolved to start her own charitable organization.

Donations

Donating to charity is certainly one way to enhance your legacy, as a prior chapter already suggests. Be financially generous with charitable causes, especially if you lack the time, talents, resources, skills, insight, ability, or energy to engage in charitable works on your own. Give regularly to your favorite charities, and give specially when they present to you an attractive special cause. Your regular gifts can enable your favorite charity to operate its programs, pay its staff, and maintain its facility. Your special gifts can enable your favorite charity to expand its programs and improve its facility or develop new facilities to reach and serve more disadvantaged individuals and families having servable needs. Leave a legacy of charitable giving that your children, grandchildren, and broader community can appreciate and likewise pursue.

Taxes

The tax laws create certain advantages to giving to charities. One advantage is that donations to a charitable organization that the IRS recognizes as tax exempt may be deductible from your taxable income. If your donations exceed the standard deduction and otherwise qualify, you may be able to significantly reduce your federal and state income taxes through charitable giving. Consult your tax preparer or attorney. Another advantage that the tax laws offer is to donate securities to avoid paying capital gains taxes on their appreciation. Rather than selling the security, paying the tax, and donating the remainder, you may be able to donate the security itself, the full value of which the charity can receive, while you avoid paying any capital gains tax. You may also be able to donate a qualified distribution from your tax-advantaged retirement accounts to avoid paying taxes on required minimum distributions (RMDs). Again, consult your tax preparer or attorney. Leave a legacy of charitable giving, while taking best lawful advantage of tax incentives. 

Bequests

You may also make bequests through your will and estate plan to your favorite charities. The advantage of a bequest after death over a donation while living is that you can arrange for a bequest in your will, when your passing has already ensured that you retained enough assets to care for yourself while living. You may designate a percentage of your estate or a specific amount to go to charity, after making appropriate bequests to your family, church, or others, so that your charitable giving does not interfere with your other commitments and other aspects of your legacy. If you name a charity in your will, consider notifying the charity so that it can ensure that your personal representative honors your designation after your passing. You may also change your charitable designations with codicils (amendments) to your will over time, as your interests, affinities, and finances change. Consider charitable bequests as a way to enhance your charitable legacy.

Volunteering

Volunteering for charitable organizations is another way to enhance your legacy, as a prior chapter already suggested. Your volunteering makes a difference not only to the charity itself, including its board, director, and staff members, but also to the charity’s disadvantaged patrons whom you serve. When, for instance, you serve in a soup kitchen, you directly bless the hungry patrons who eat what you prepare and serve. When you volunteer in a crisis center, you directly bless the frightened patrons whom your service cares for and protects. Yet your volunteering also blesses, heartens, and encourages your family members, friends, and acquaintances who see and appreciate your good work. You create a wake of hope, faith, and care that washes over into other things that you and others do, not strictly within the charitable field but that are loving and caring nonetheless. Your model of steady volunteering leaves a rich legacy.

Mission

Sometimes, though, you may not find a charitable organization in your area that is doing the charitable work you see that your community needs. Their mission may not permit them to do the work that you see and suggest. Charitable organizations must have clearly defined missions, to obtain their tax-exempt status, attract donations and volunteers, and guide their programs and staff members. And sometimes, those missions don’t reach emerging community needs. Emerging new needs is one reason why Americans add about 100,000 new charities annually. You could be one of those forming a new tax-exempt charitable organization. Doing so could certainly contribute to your legacy. Begin with the underserved population you wish to help and the issue with which you wish to help it. You might, for instance, wish to help wheelchair-bound children experience the outdoors. Or you might wish to help single mothers who have housing issues and financial problems. If you can’t find a local organization serving the population and its needs, and you know the needs exist, then consider forming your own charitable organization.

Organization

Federal tax law, particularly Internal Revenue Code Section 501(c)(3), favors a nonprofit corporation as the form of charitable organization. You incorporate your nonprofit corporation under state law by filing articles of incorporation, typically using the state’s own forms. See the example articles of nonprofit incorporation form among the forms at the back of the guide Help with Your 501(c)(3). Choose a name for your organization that identifies or suggests the population you desire to serve, the service you plan to provide, and the geographic locale. Search the state’s database to ensure the name you choose is available. Articulate with care the mission your charity expects to fulfill. And carefully limit the corporation’s purpose to charitable activities. See the guide Help with Your 501(c)(3) for more details. 

Governance

Once you file your charity’s articles of nonprofit incorporation with the state, as the incorporator you may then appoint your charity’s first board. The board will govern your charity. Select your board members carefully for their commitment to the charity’s mission and the discernment, skills, and resources they can bring. Your board’s first action will be to adopt corporate bylaws to govern your charity’s operation. See the example bylaws among the forms at the end of the guide Help with Your 501(c)(3). The bylaws tell the board how to elect officers, hire an executive director, adopt budgets, form committees, and take other actions to promote the charity’s mission. As incorporator, you may appoint yourself to your charity’s board and seek nomination and election as its board chair and corporate president. While you cannot control the board, as a board member and the charity’s president, you may influence the board with your judgment, vote, and agenda. 

Exemption

Your charity’s next significant act is to obtain tax-exempt recognition from the Internal Revenue Service. The IRS invites your organization to complete an online application for that status. See the detailed explanation in the guide Help with Your 501(c)(3). Internal Revenue Code Section 501(c)(3) grants charitable organizations exemption from federal income taxes. It also grants tax deductions for qualifying donations, which can increase your charity’s ability to attract donors and raise funds. IRS recognition of your organization’s tax-exempt status may also relieve your charity from state income taxes and even from real property taxes in some jurisdictions under some circumstances. Gaining tax-exempt status with the IRS takes some time and administrative skills but is the gold standard for charitable organizations. 

Operation

Tax-exempt charitable organizations come in all sizes. Many founders of charities operate them as volunteers in their part time, while holding down full-time jobs and raising families. Don’t feel as if you must give up other meaningful responsibilities or opportunities to operate your 501(c)(3) charitable organization. You may be able to raise funds, recruit volunteers, and serve your charitable population and cause without other substantial changes in your lifestyle and responsibilities. You may also cede leadership to your organization’s board and operations to a paid executive director so that your charity can grow without your substantial involvement or investment of time or funds. On the other hand, you may dive into your charity’s development and operations with your full energies and time, if your life is in that season to pursue a charitable legacy. 

Legacy

The legacy that your charitable work leaves isn’t a given. Just because you pursue a charitable calling doesn’t mean that your pursuit will create or enhance a generous and outward-looking legacy. Charities by their nature have that goal, to serve where service would otherwise be unavailable if not for the good heart of well-intentioned individuals. Pursue your calling and good intentions. But do so wisely. Use your head and accumulated wisdom. Don’t just go through the motions of charity. Instead, try to make a difference for the individuals and families whom you wish to help or the cause you wish to promote. Your nonprofit leadership can enhance your legacy. Yet let the relief, recovery, healing, and growth of the individuals whom you seek to help, and the blossoming of the good that you seek to promote, be the better evidence of your legacy. Make a difference through your charitable work, and you’ll leave a charitable legacy.

Reflection

What charity is closest to your heart, interests, passions, and affinities? Could you make a practice of giving regularly to that charity? Look at your tax situation for opportunities to enhance your charitable giving, while reducing your tax burden. Could you include your favorite charity in your will and estate plan, to enhance your legacy, without interfering with your desires for your family? What volunteering could you do for your favorite charity? Do you have family members whom you could involve in your charitable service? Do you sense a calling to start a charitable organization of your own, to serve a special population or cause that no other charitable organization in your area is serving? Can you clearly articulate your new charity’s mission? Do you have friends or acquaintances with knowledge, skill, resources, or commitment who share your charitable interests and would participate with you in your new charitable organization? 

Key Points

• Regular and special charitable donations can enhance your legacy.

• Tax laws can give special advantages to charitable donors.

• Your will may provide for charitable bequests enhancing your legacy.

• Your volunteering can also enhance your charitable legacy.

• You may start your own charitable organization to meet unmet needs.

• Tax-exempt status is the gold standard for charitable organizations.

• Know your resources and network before starting your own charity.

• To enhance your charitable legacy, be wise in your charitable work.

Read Chapter 11.