By John Shadden | Maybe it’s the holiday spirit or maybe it’s the impending fiscal cliff, but this year more Americans are giving to charity. According to The Chronicle of Philanthropy, it’s been a great year in giving. In November, Network for Good, a nonprofit charitable organization, has at least doubled the amount of money raised online, as compared with the same period of this quarter in 2011.

Our friends and neighbors are giving more than ever. Even younger generations like Long Beach Rotaract are joining in and giving. But are we giving in a smart fashion? This begs the question: how can we do good not only for others, but in a way that’s wise for our wallets? Let’s take corporate giving as an example.

In 2011, Morgan Stanley gave $47.4-million to a range of charities. It maximized its giving power by offering to match up to $4,000 per employee. Matching is a great option for corporate donations because it allows employees to be part of the process while adding even more to the total gift amount.

As a business owner, you might be skeptical of how investing in a charity would be wise for your wallet. Remember that these contributions help strengthen the bonds between you and the local community. Additionally, it will help you reach a new audience, increasing name recognition and brand reputation among current and perspective customers. Contributions can help you build relationships with key community members and officials, creating valuable connections when it comes to regulatory obstacles.

However, the benefits for your company can extend beyond just marketing. Philanthropy can be key in propelling employee motivation and cultivating company loyalty. Allowing employees to choose the kind of philanthropy your organization supports will help them feel more active while reinforcing the company’s reputation as a sought after organization within the industry.

Personally, philanthropy is something I’ve been involved in at many levels and through various stages of my life. I think the philanthropic spirit is part of American culture and my family culture. I work with a number of organizations at the top and grassroots levels. Helping to found the Food For Kids initiative, a partner of the Volunteer Center South Bay-Harbor-Long Beach, has been one of my most rewarding experiences.

Many of my clients ask how they can balance giving with all of their other personal and business expenses. This is routinely part of the financial planning process, and often something we do at our semiannual meetings for individual clients and family foundations.

Let’s start this assessment with personal giving: many that tend to focus on annual income, another way to think of how much you should donate is by proportion of net-worth. The net-worth assessment is ideal for many who have inherited large sums recently or have retired. As for businesses, according to The Chronicle of Philanthropy, America’s biggest companies give between four percent and one percent of pre-tax profits.

These standards can become daunting if you wait until the December 31 tax deadline. Rather than paying in one chunk, you can spread out donations throughout the year using an auto-deduct donation service. Remember to check in to the charity of your choice, to make sure your dollars are spent prudently. There are many websites such as Guidestar which give you access to their financial statements.

When thinking about making philanthropic donations, remember to plan giving out ahead of time, budget accordingly and take advantage of all applicable tax deductions. Charity often comes to the forefront around the holidays, as we celebrate with family and friends, reflecting on what we have to be thankful for. Yet, there’s time to give back all year long, in a way that benefits everyone.

John Shadden is a Financial Advisor with the Global Wealth Management Division of Morgan Stanley
in Long Beach.

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