Charitable giving and the topic of generosity is often treated as a purely financial decision. In reality, it is a theological one. The motivation for our giving reveals what we believe about God long before it reflects a tax strategy.
At its core, generosity is about formation. It is one of the chief ways that the Spirit works to mold us to be more like Jesus (Rom. 8:29). To be generous is to be like God. From the very beginning, God is shown in Scripture to be extravagantly generous. He creates the world, not out of some deficiency in himself, but out of a desire to share his life and love with us. Even after the fall, when sin mars God’s good creation, he continues to generously provide for his people culminating in the incarnation of Jesus, God with us. From start to finish the Bible is a story of generosity.
And because we are created in God’s image (Gen. 1:26-28), we are meant to emulate him, to reflect his character back to each other and to the rest of creation. One of the ways we do this is by being generous with our time and resources. Giving is a response to the generosity we have been shown by God. In that way, it acts as a sort of thermometer, revealing the level by which we have grasped God’s generous character.
So, if we affirm the call to be generous, what are some practical tools available that we can leverage to reduce friction and allow our generosity to flourish?
- Donor-advised fund (DAF): a DAF is a charitable giving account that allows you to set aside resources for generosity, receive an immediate tax deduction, and then recommend grants to qualified charities (churches, ministries, etc.) over time.
- Qualified charitable distribution (QCD): a QCD allows individuals age 70 ½ or older to give funds directly from their IRA to a qualified charity, satisfying potential required minimum distributions and excluding the distributions from taxable income.
- Gifting appreciated assets: donating appreciated assets (e.g., low basis stocks or funds) allows you to support charitable causes while avoiding capital gains taxes that would result from the sale of the asset and often receive a deduction for the full market value of the asset.
- Legacy giving: most people think about giving in the context of estate planning (e.g., I’ll leave all my assets to my children when I pass), but we encourage clients to consider giving while they are still alive to see the impact. Gifting to family members, churches, ministry organizations, etc. during one’s lifetime is beneficial both for the giver and the receiver. For a provocative book on this topic, check out Die with Zero by Bill Perkins.
Generosity is less about checking a box or even maximizing tax efficiency and more about reflecting God’s character, working in cooperation with the Spirit to form us into a people who are more like Jesus. May we be a people who hold tightly to love and loosely to our resources, willing to surrender it all for the glory of God and the advancement of his kingdom.
Give us a call if you’d like to discuss how any of these generosity tools fit into your financial plan. It is a privilege to help Christians reflect God’s generosity through intentional giving!
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