Be Like Buffett and GIVE (Charitable Giving 2024)

Warren Buffett made headlines recently when he released a letter to Berkshire Hathaway shareholders. The 94-year-old “Oracle of Omaha” didn’t highlight his multi-decade investing results, rather he used this communication to detail ongoing philanthropic plans for his vast fortune, now valued at about $150 billion.

Buffett donated an additional $1.1 billion in Berkshire Hathaway stock to his family’s four foundations (the Susan Thompson Buffett Foundation, The Sherwood Foundation, The Howard G. Buffett Foundation and NoVo Foundation), in an effort to fight against the concept of generational wealth. He wrote “I’ve never wished to create a dynasty or pursue any plan that extended beyond the children. I know the three well and trust them completely. Future generations are another matter.”

As someone who often hears from families about their desire to financially advance their children, grandchildren and great grandchildren, this was an eye-popping statement. Buffett has said that “hugely wealthy parents should leave their children enough so they can do anything but not enough that they can do nothing.” And maybe, that’s great advice for the not-so-wealthy too. We may not have to think about giving away massive wealth (a good problem to have!), but perhaps more should be concerned with taking care of their own financial foundation, than building for successive generations.

This is of course the time of year that you might be thinking about charitable giving. Whether or not you have Warren Buffett dough, here are a few best practices to keep in mind as the solicitations roll in, according to the IRS.

Be Alert to Fraud: Scammers use names that sound like well-known charities to confuse people. Ask for the charity's name, website and mailing address so you can independently confirm the information. Then use the IRS Tax Exempt Organization Search tool to verify if an organization is legitimate. Never work with charities that ask for donations by giving numbers from a gift card or by wiring money. It's safest to pay by credit card or check.

Don't Overshare: Sophisticated fraudsters know that your personal information is valuable. Never disclose Social Security numbers, credit card numbers, personal identification numbers or passwords.

Resist Pressure: Scammers often pressure people into making an immediate payment. In contrast, legitimate charities are happy to get a donation at any time. Donors should not feel rushed.

Know Your Tax Benefit: Only the 12 percent or so of those who itemize their deductions are entitled to a tax benefit for charitable giving. You can try to “bunch” deductions to push you above the standard deduction threshold and accelerate charitable giving for that particular year. If you are going to claim a charitable deduction, keep good records. For any cash or property valued at $250 or more, you must have a receipt (bank record, payroll deduction or written communication) identifying the organization, the date and amount of the contribution and a description of the property.