Philanthropy is one of those buzzwords that often gets tossed around inappropriately. Though philanthropy and charity have the same intention, they aren’t the same.
The main difference is that philanthropy is usually more strategic, organized, and long-term.
To help you understand more, this is everything you need to know when it comes to philanthropy.
What Is Philanthropy?
Philanthropy refers to individuals who give a charitable donation to a nonprofit organization. They’re private contributions made on behalf of the public good.
Philanthropy includes donating money to a worthy cause or volunteering one’s time to aid in a nonprofit’s mission.
The most effective philanthropy involves a strategy that identifies the vision and values that guide you over the long term. It also involves putting systems to target the core problem and alleviate its symptoms.
Philanthropy needs to be thorough and well-thought-out to be successful.
If you want to find out more strategies for success, it can be helpful to research common mistakes. This can help you avoid the pitfalls that often plague nonprofits and philanthropic work.
Charity vs. Philanthropy
The main difference between philanthropy and charity is that philanthropy casts a wider net. Charity involves short-term donations targeted at a specific problem.
Philanthropy involves a more significant strategy over the long term. Instead of a one-time donation, philanthropy may involve ongoing partnerships with the community.
Taxes and Philanthropy
Philanthropy has become a common part of wealth management for many affluent people. Though tax breaks shouldn’t be the sole goal for philanthropists, charitable giving offers many tax breaks.
When thinking about how to plan a philanthropic portfolio, consider creating a 501(c)3 nonprofit organization. As the founder of a 501(c)3 organization, you will receive a tax break from the government. You will also have the opportunity to control how the money is managed and invested.
An alternative philanthropic action is setting up a charitable lead trust. This provides a steady flow of donations to a charitable organization over a designated time. You will receive a tax deduction based on the value of your contributions over this time.
Finally, you can donate appreciated assets. You can avoid some capital gains tax payments by contributing stocks or real estate to a charitable organization.
These philanthropic actions are a win-win for both you and the organization or mission you choose to become involved with.
Now You Know How to Define Philanthropy
These are the most important distinctions of philanthropy and what sets it apart from a charity. Though these concepts are similar, these are the crucial differences to keep in mind.
If you want to become involved in philanthropy, strategy can’t be ignored. To be successful, you must think critically, strategically, and long-term. This will set you apart from others and ensure that your mission is successful.
And for additional information about donating, be sure to check out the rest of our blog. We have a ton of other helpful tips you’re sure to love!
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