One Kind Act continues to be inspired by the generosity of its supporters and their efforts to make a difference to the causes we support. A recent donor’s gift and the reasons for it has prompted us to take a look at ‘smarter giving’.

For many people, the giving journey mirrors their wealth creation progression and for many others, it is connected to personal experiences such as a particular ‘personal situation’ or from seeing the impact of inequalities and life chances around them. Some are influenced or encouraged by family and friends. Of course, human emotion and passions plays a big part in wanting to do something. Typically, individuals focus on wealth in stages such as growth, then preservation and finally legacy. Discussions about succession and inheritance may introduce the approach of ‘giving while living’. A period of self-reflection allows individuals to think about why they want to give, followed by what approach to take to achieve that desire and then to engage their family in the endeavour. The correlation between satisfaction in life and income weakens the further up the earnings ladder you climb. The more financial success you have, the more likely you are to see diminishing returns on happiness. Fortunately, there are other ways to be happy. Of them all, making other people happy through philanthropy is one of the most potent. And the difference you make in the world is your legacy. 

The rational, smarter and practical approach you take is quite important too. 

Donors are mindful of legitimate tax advantage available such as reduction in inheritance tax that benefit their estates and their nominated charities when planning for donations. For example, by gifting ten-percent of your taxable estate to charitable causes allows you to reduce the typical 40% Inheritance Tax Rate down to 36%. This makes a material difference for large estates on the actual tax bill and benefits the charity too – a ‘win-win’ outcome. With IHT tax-free allowances frozen for a long time and with rising house prices, increasing IHT taxable estates are costly and giving part to charity makes sense to reduce the tax bill. 

In addition, donors want to engage with their charity partners to dig a little deeper into ensuring their donations make an impact for their chosen causes or projects. The younger generation (being recipients of the intergenerational wealth transfer from their baby-boomer parents) are now being made aware that their education and starting point in life allows them to not only build further from what their parents have ‘invested’ in them but to do so whilst giving away part of that accumulated wealth to benefit those with disadvantaged life chances. By the same token, younger people have influencing peer groups and social media and, therefore, see problems and imbalances in the world at an early stage in their lives. They are encouraging their parents to think differently about philanthropy in terms of activism and are more aware of global issues and the continued need for philanthropy and greater social change. Their involvement can have a profound influence on the priorities of the ‘family legacy’.

"I believe in giving wealth away which was created. Sharing wealth with others makes me happy" (recent OKA Legacy Donor)