To shed more light on the concept of lifetime giving, we asked Dennis Hall from Yellowtail Financial Planning to explain. Dennis highlights the joy and benefits of lifetime philanthropy.
Many individuals who have recently gone through a divorce often find themselves reflecting on their values and priorities, leading them to consider philanthropy as a way to create positive change in their lives and communities.
Whenever I talk with clients about philanthropy it tends to evoke images of large bequests detailed in their will. According to the Charities Aid Foundation (CAF), legacy giving accounts for a substantial part of charitable income, however there are compelling reasons to consider philanthropic donations during your lifetime. Charitable donations made while you’re alive not only brings tax advantages but also offers personal satisfaction and the opportunity to witness the positive impact of your generosity.
Tax Benefits
A significant incentive for making charitable donations during your lifetime is the potential tax benefits. The UK has several tax reliefs for charitable giving. Donations to registered charities can reduce your Income Tax bill, as you can claim back the difference between the higher rate of tax and the basic rate on your donation. This means that if you’re a higher-rate taxpayer, you can reclaim 25% of the donation’s value.
Additionally, gifts during your lifetime immediately reduce the size of your estate, potentially lowering your Inheritance Tax liability. By gifting now, you can see the immediate benefits of your philanthropy while also ensuring more of your estate goes to the causes you care about, rather than to the taxman.
Exercising Personal Choice
Lifetime philanthropy allows you to exercise personal choice over where your donations go. You can select specific projects or initiatives that resonate with you and align with your values. This level of control ensures that your contributions are used in ways that you find most meaningful.
You might choose to support local community projects, or fund medical research leading to breakthroughs in areas important to you, or contribute to environmental issues. Seeing the tangible outcomes of your donations can be incredibly rewarding and motivating.
Positive Associations and Personal Fulfilment
There’s a unique joy that comes from knowing you’ve made a difference. Research by the University of Zurich found that people who spend money on others report greater happiness. Similarly, a report by the Women’s Philanthropy Institute noted that acts of generosity can lead to greater life satisfaction and lower levels of depression and anxiety.
By making donations during your lifetime, you set an example for others—family, friends, and even your community. Your actions can inspire a culture of giving and encourage others to contribute to causes they care about.
Building Relationships and Legacy
Lifetime giving also allows you to build relationships with the beneficiaries of your generosity. Whether it’s connecting with communities improved by your donations, or seeing firsthand the progress of research projects, these interactions can be incredibly fulfilling.
And you can build a legacy of philanthropy that extends beyond financial contributions. Engaging actively with your chosen causes helps embed a culture of giving within your family, encouraging future generations to continue the tradition.
While bequests will always play a crucial role in philanthropy, many of my clients agree that the advantages of making donations during your lifetime are significant. From tax benefits to personal satisfaction and the ability to witness the impact of your gifts, lifetime giving offers numerous rewards. By choosing to donate now, you not only contribute to causes you care about but also enrich your own life and inspire others to follow in your philanthropic footsteps.
Embrace the opportunity to make a difference today—you’ll find that the rewards are far greater than you might have imagined.
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