Philanthropy is a philosophy and practice that is frequently embraced by people in luxurious financial positions. One of the most famous philanthropists is also an iconic investor: Warren Buffett.
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Buffett regularly gives vast amounts of money to charity, enough to actually eat into his wealth. Just last June, he announced that he was donating shares of Berkshire Hathaway stock worth some $5.3 billion to five charities, per Forbes.
But, as Erika Kullberg, a personal finance expert, attorney and the founder of Erika.com pointed out, philanthropy doesn’t just warm your heart — it beefs up your bank account.
“Philanthropy isn’t just about giving; it can also yield significant financial benefits for both the giver and society,” Kullberg said. “Warren Buffett, one of the world’s most successful investors, has famously committed the majority of his wealth to charitable causes.”
Buffett isn’t a philanthropist primarily for the financial advantages; he’s mostly in it because he expresses genuine care for others and has a lot of money to spare. Still, philanthropy is a very savvy personal finance move … if you can afford it, of course. Here are a few financial benefits of being a philanthropist.
You Can Build Up Your Professional Brand and Network
To put it somewhat bluntly: Philanthropy makes you look good. It also bears the opportunity to connect you with fellow donors — a savvy move.
“By engaging in philanthropy, individuals can enhance their public image and establish themselves as community leaders, which can lead to increased business opportunities and networking prospects,” Kullberg said. “This visibility can often translate into greater levels of trust and credibility, which are going to be important for success in any industry.”
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Donating Stocks Helps You Save on Taxes
Don’t be limited and donate only cash to charities. You can also donate stocks and other assets for a substantial tax advantage.
“Giving can be done more tax-efficiently by giving assets such as stock that have appreciated in value — thus freeing taxpayers from paying capital gains tax while benefiting a charitable cause,” Kullberg said.
The ‘Bunching Strategy’ Can Save You Even More
Through philanthropy, you can implement the “bunching strategy,” which entails concentrating charitable donations into a single year to maximize tax deductions.
“Stack your gift-giving for multiple years in one tax year to reduce your taxable income,” said Adam Nash, CEO and co-founder at Daffy, a financial platform for giving.
Final Note: You Can Not Be in It for the Money and Still Recognize Smart Moves
This one isn’t a financial tip so much as it is a behavioral one. Many people feel that the noblest and perhaps most spiritually significant or pure way to give to charity is to give anonymously and without the expectation of something in return.
That’s perfectly fine. However, it’s also OK to “own” this a little bit.
Philanthropy inherently comes with tax benefits and networking opportunities, so it’s acceptable to take advantage of what it can provide.
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This article originally appeared on GOBankingRates.com: 3 Financial Benefits of Being a Philanthropist — Like Warren Buffett
