MANY FOLKS DELAY financial gifts to family and charity until their death. But I advocate a different approach: giving generously during our lifetime, or what I like to call “giving with a warm heart, not a cold hand.”
This not only transforms the lives of the recipients, but also enriches those who give, making their lives more meaningful and fulfilling.
One of the most compelling reasons to give during your lifetime: You get to see the impact of your generosity. Unlike bequests and end-of-life giving, donating while you’re alive lets you witness how your contributions help family, change lives, support communities or drive progress in causes you’re passionate about. This immediate feedback can be incredibly rewarding and can even guide further giving, shaping it so it has greater impact.
Giving also fosters connections with those you’re helping. Whether it’s through charitable organizations, community projects or individual support, you become part of a story of change and improvement. These connections can deepen your understanding of the lives of others and build bridges across communities.
On top of these emotional benefits come financial advantages. By strategically donating, you can enjoy tax benefits while still alive, potentially allowing you to give even more. Charitable donations can be tax-deductible and are immediately removed from your estate, providing a financial incentive to give now rather than later.
For those with substantial wealth or a deep desire to give back, setting up a charitable trust or foundation can be a way to manage how your assets are used for good, ensuring a lasting impact that reflects your personal values and goals.
Still, while the financial benefits can be significant, giving will always leave you with less money than before. So why give? I believe the greatest benefits are psychological.
There’s a profound sense of joy and fulfilment that comes from giving. Studies have shown that altruism not only benefits the receiver, but also significantly boosts the happiness and health of the giver. This phenomenon, often referred to as the “helper’s high,” arises from contributing to the well-being of others, reinforcing the concept that generosity is as good for the giver as it is for the recipient.
Giving now also allows you to craft and witness your legacy in real time. This can be particularly meaningful for those who want to ensure that their wealth is doing good according to their principles and vision. It’s a way to shape how you’re remembered, not just in terms of wealth, but in the values you championed and the differences you made.
For those who have accumulated “more than enough,” there’s a growing debate about the moral responsibilities that come with it. By choosing to distribute wealth throughout your life, you’re actively participating in reducing inequality and addressing immediate needs, rather than hoarding resources until after death.
Giving with a warm heart, not a cold hand, isn’t just a philanthropic strategy. It’s also a lifestyle choice that can enrich the giver’s life immeasurably. It breaks the traditional mold of wealth distribution, encourages active engagement in societal improvement, and brings a host of emotional, psychological and financial benefits.
By choosing to give now, you aren’t just investing in others. You’re also investing in a richer, more fulfilling life experience for yourself. So, why wait? The time to make a difference is now, with a warm heart that truly feels the joy of giving.
Dan Haylett is a financial planner and head of growth at TFP Financial Planning, a U.K. firm that specializes in modern-day retirement planning. Dan’s “pull back the duvet every morning” purpose is helping clients spend their time and money on what’s truly important to them. A version of the above article first appeared on Dan’s website, where you can also learn about his Humans vs. Retirement podcast. Follow him on X (Twitter) @DanHaylett. Dan’s previous articles were Seven Reasons to Work and The Changes Ahead.
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In response to Linda’s questions below, some great global charities include: Concern Worldwide, Goal, Oxfam, Unicef, World Vision, International Rescue Committee, Religious Sisters of Charity, Save the Children, Smile Train. All work with the poorest of the poor in developing countries.
How to Choose a Charity Wisely – The New York Times (nytimes.com)
How to Get Your Money to Those Who Need It More Than You – The New York Times (nytimes.com)
Thank you, Margaret 😊
I completely agree. Why make your kids wait until you die? They may be in their late 50’s or 60’s at that point. They need the money when younger and raising a family. You get to see them benefit, and that it’s a great feeling. As some have said, we’ve helped with college costs and down payments for homes, which are too expensive now. It takes way too long for the younger generation to accumulate a down payment, especially when the average home in the northeast is well over $500k. Give now if you can
I’m taking my Roth disbursement and gifting it my sons every month, as long as it is deposited in their own Roth IRA’s.
This is a great idea that hadn’t occurred to me! Thanks.
I spent my career in the investmnt business and this was a frequent conversation that I had with clients. It was not, however, and easy conversation as most clients were worried about whether they would have enough money to last the remainder of their lives. For some, this was a legitimate concern, but for many, it was more often about control, or whether a significant gift would be used wisely. This often lead to a discussion of gifts of personal articles, especially jewelry. In either case, the rationale was similar: Making a lifetime gift allowed the giver to share in the enjoyment of the gift with its recipient. Fortunately, my wife and I agree in this regard and have made gifts to our son, as well as to other family members.
We desperately want to give to our children as well as some charities now. The dilemma is ensuring we have enough left for our future (we are 68 and 66), dealing with tax rates and IRMAA cliffs, as well as rationalizing starting SS now vs 70 to help with this giving and the associated torpedo coming from that IRS office. And let’s not forget the RMDs and the need to reduce their impact by reducing/draining/converting IRAs….I’m a wicked smaaht guy(MA thing) but this makes my head hurt.
Before you set off on the gravy train have you thought about disability? Longterm care? Ungrateful children? Watch the 2003 Hindi movie “Baghban'(Persian for garden).“kya boya tha, aur kya kata soche bagban “. What did I sow and what did I reap?” Ungrateful children.
If your kids aren’t like those in the movie you reference, you need not worry about it.
I recently read the book by Bill Perkins, “Die With Zero.” He discusses this idea in Chapter Five, as I recall.
While I don’t consider my self “wealthy,” my financial planning over the years is set up to provide my bride of 50 years and I a comfortable retirement. I retired in January of this year, so it is all new, but going well so far.
At present, she is not inclined to give our two adult children any type of “major gift,” as she wants to leave our money to them when we pass, but I am working on her.
I love the comment about giving with the warm heart vs. cold hand. My sentiment exactly, and for all the reasons you mentioned.
I learned about “Die with Zero” from this site and read it recently as well. Very thought-provoking.
Here’s Rick Connor’s review of the book:
https://humbledollar.com/2023/08/die-with-zero/
As I have written previously when my parents died within months of each other in 2018 we unexpectedly received a nice inheritance. The following Christmas we gave our two children who were in their early thirties a final financial present from their grandparents (previously they were receiving $100 annually). My son and his wife used the money as a down payment on a house in early 2020 (with a resultant mortgage rate of < 4%). My daughter was able to pay off her college debt and is now able to max out her pretax benefits. This has helped set up both of their finances for their entire adult lives. And if you think about it the effects of this giving will have compounding financial benefits for the rest of their lives as well.
If my wife lives to be a centurion as her mother then they will not receive their inheritance from us until they are in their seventies. How much of an effect will that have then? Most likely their finances at that point will be baked in.
Please share this story with your wife. It might change her thinking.
Thanks David.
When my step dad passed also in 2018, my two sisters and I each received a $<$200K inheritance.
At the time I used a portion of my inheritance to pay off my daughter’s debts prior to her marriage and to assist my son, as he returned from the military and launched out on his own. The balance we used as a component of building our retirement home, where we now reside.
Today, they are both independent, although my son, 40, is not as well established as my daughter, 46. It is my goal to gift each of them $50K within the next 5 years. The conundrum is whether to gift it $10K annually for 5 years, or $50K as a one time gift.
My wife is concerned that as a one time gift, it will not be “well invested or utilized” but I have pointed out that what they do with the gift is their business. Whether to give the gift and how, is our business.
I continue to work on this issue and I am certain we will reach a compromise. Thanks for your note.
You’ll want to spread out the gift over at least three calendar years to avoid triggering the gift tax:
https://humbledollar.com/money-guide/gift-tax-exclusion/
I would guess there are a lot of folks who will be centenarians for retirement planning purposes.
Beautifully stated, Dan, and I could not agree more. The best quote I’ve seen in a while is your “giving with a warm heart, not a cold hand.” If you created that one, I’m going to owe you a lot of copyright fees!
I think it’s also important to remember that charitable giving isn’t always about money — some of our most meaningful donations involve time and caring. I auto-donate every month to healthcare charities like Stand Up 2 Cancer, Direct Relief and Remote Area Medical…. don’t even notice the credit card entries. But the best two hours of my week is spent delivering for Meals On Wheels. I’ll take those smiles over tax deductions every time.
I’m heavily involved volunteering for a local nonprofit which is currently going through a bit of a crisis. My adult kids are waiting for me to quit, but despite the current difficulties, the like-minded people who are also serving and determined to see it through make quitting not an option. Like Meals on Wheels, we serve a needy population who depend on our organization. We will hang in there!😊
100% agree!
Both our sets of parents wanted to watch enjoy what they could give. We still inherited more when they passed. From the sales of their homes and stuff.
We give to our church, food pantries, homeless shelters and, of course, our children.
Thank you for encouraging giving while living, Dan. I contribute to a number of charities, plus a pledge to my church, but I’ve decided to set up a charitable trust instead of writing out all the checks myself. Any tips from you or other commenters about how to choose your favorite charities and designate either a percentage of the total or specific dollar amounts? How many organizations is too many? I’d rather give more money to a few than a little to many. Book or website suggestions are welcome. Thanks.
Linda, we have a donor-advised fund with Fidelity, also to make giving and tax-time easier. We have regular donations (church, individuals whom we know personally doing missionary or ministry work) and a few other local entities. For example, we donate every month to two campus-based programs that support needy college students. Since I work there, it’s a natural fit.
We also have extra money that is not regularly committed parked in the DAF. I use that for extra donations when disasters arise or when another smaller need tugs on my heartstrings. Finally, I make extra “Christmas gift” donations in December to our regular charities.
Recently read a study that charities would prefer gifts to them rather than donor funds. Too much money sits in the donor funds and not enough is distributed to the charities in need.
Linda – We also pledge to our church’s budget. Given the current situation in the world, I recently donated to World Central Kitchen. This is an organization dedicated to feeding individuals and families that are impacted by any number of calamities – including environmental, political, geographical, and war.
Thanks, Jeff. I’m familiar with that organization but haven’t yet donated. I know that there’s enough food now for everyone but that distribution is the problem. WCK attempting to address this.