We want to help you make more informed decisions. Some links on this page — clearly marked — may take you to a partner website and may result in us earning a referral commission. For more information, see How We Make Money.
Whether you have $25 million or $25 to spare, there’s a lot to learn from how the world’s richest woman, MacKenzie Scott, is donating her fortune.
Scott, who was named Tuesday to TIME’s list of the 100 most influential people of 2020, outlined how she divvied up $1.7 billion to different charitable organizations in a July Medium post a year after pledging to donate the majority of her fortune over her lifetime.
“There’s no question in my mind that anyone’s personal wealth is the product of a collective effort, and of social structures which present opportunities to some people, and obstacles to countless others,” wrote Scott, who used to be married to Amazon founder and CEO Jeff Bezos and remains a major shareholder in Amazon.
With a net worth Bloomberg puts at nearly $60 billion, Scott wrote about how she looks to donate to organizations and leaders that best align with her values. Here are some ways you can take a page from Scott’s book and donate in a way that advances your own values and makes an impact on things you care about.
Research Before You Give
Scott considers many factors when identifying organizations to receive her donations. Determine how your dollars can do the most good for the causes that inspire you by giving with similar thoughtfulness. Here’s what to look for:
Before donating, Scott reviews each organization’s leadership, making sure leaders have firsthand experience with the issues the organizations focus on.
The leaders at the organizations she selects bring “lived experience” to the causes they support, which she wrote helps to better inform the solutions they advocate for. And because Scott believes a range of perspectives and experience is critical to problem solving, she and her team “selected for diversity in leadership across all categories of giving.”
So if you want to support racial equity, look for organizations led and endorsed by people of color. If public health is your cause, seek out organizations with doctors and other medical professionals at the helm.
Record of Change
Scott isn’t looking to take chances when she donates. She has high expectations for the organizations she supports, and so should you. That means she’s not giving to any groups that don’t “have a track record of effective management and significant impact in their fields.”
Evaluate how well an organization’s claims align with their actions. Your research may also include how it has pivoted its aims to intersect with today’s most pressing issues, like the COVID-19 pandemic.
Both long- and short-term vision is a common characteristic among the recipients Scott chose. “Every one of them is tackling complex challenges that will require sustained effort over many years, while simultaneously addressing consequences of the COVID-19 pandemic,” she wrote.
How to Research
While Scott has a whole team of nonprofit advisors helping her vet organizations to support, there’s plenty you can do on your own to make sure your donations make the biggest impact.
The Federal Trade Commision offers a list of tools you can use to begin researching where your donations will do the most good:
This site, from BBB Wise Giving Alliance, helps donors give wisely by producing evaluative reports on charities. These reports address organizations’ governance, results reporting, finances, and truthful and transparent communications.
Charity Navigator has information on all 1.6 million nonprofits registered in the U.S., and ranks charities based on their financial health, accountability, and transparency. Rankings range from four stars for exceptional charities to zero stars for exceptionally poor charities.
CharityWatch describes itself as a charity watchdog, giving detailed ratings and analytics for over 600 charities. The site exposes nonprofit abuses and lets donors know how efficiently their donations may be used.
GuideStar is an information service you can use to learn specifics about the nonprofits you’re considering contributing to, from their missions to financial histories, annual records, and reports.
From the Experts: Maximizing Your Donations
If you’re looking to start donating but don’t know where to begin, start small, says Thomas Hlohinec, CEO of Rise Financial Partners in Philadelphia, a Christian financial advising firm with a focus on aligning investments with values. Then you can determine what works best for you.
“Start by setting aside $5 to $50 per month, if you can,” Hlohinec says. “But at the end of the day, it’s really an individual thing.”
Whatever amount you choose, you can make your dollar stretch further and best integrate giving into your overall financial plan with a bit of strategizing, especially when it comes to investments.
IRA Distribution Rollover
Tax law requires account holders over 70 ½ to take minimum distributions from retirement accounts each year (waived for 2020 through the CARES Act), which are counted as taxable income. However, you can also complete a direct rollover to a nonprofit organization and forgo income tax on the distribution, says Katherine Earhart, a financial advisor with Fairlight Advisors in San Francisco.
When you donate directly from your IRA to a charity, the donation reduces your adjusted gross income. Lowering that amount can have several positive effects, like reducing your tax obligation and lowering medicare premiums, according to Tara Unverzagt, a CFP with South Bay Financial Partners in Torrance, California.
Set Up a Donor Advised Fund (DAF)
If you have the resources, setting up a donor advised fund (DAF) can be a great way to step up your giving. These funds work similar to investment accounts but are designed for charitable giving — you can contribute assets like cash, stocks, and even real estate, then benefit from an immediate tax deduction based on the amount you put in.
While you decide which organizations to support, your donations can grow within the account. “They are excellent vehicles for folks who know they want to give to charity but may not know the specific charities today,” says Jirayr Kembikian, CFP with Citrine Capital in San Francisco. When you wish to donate funds, submit a donation request for a qualified charity of your choice.
There is typically a large minimum donation requirement for these funds, says Christina Gamache, a wealth advisor with AUDAX Wealth Management in Anchorage, Alaska. A DAF through Schwab Charitable or Fidelity requires a $5,000 minimum initial donation. Furthermore, your contributions are irrevocable.
Donate Appreciating Investments
Instead of selling an asset and paying capital gains tax on the sale, you can gift the asset directly to a charity, which does not have to pay taxes on its growth, says Ashley Coake, a CFP with Cultivate Financial Planning in Virginia.
If you gift stock that’s appreciated, you can get 100% of the market value as a deduction from your taxes and forgo capital gains taxes on the shares, says Unverzagt.
“Let’s say you own 100 shares of Apple that you bought 5 years ago and it’s in a taxable account, not an IRA,” says Hlohinec. “That’s going to incur a lot of long-term capital gain.” Instead of selling the shares and donating the proceeds after-tax, “you could just go ahead and donate five shares of that directly.”
Charitable Estate Planning
As you look at your long-term plan, consider naming charities as beneficiaries that will receive your assets when you die. This move can be especially beneficial if you hold accounts that haven’t been taxed yet, like IRAs, says Coake, because charities won’t have to pay taxes on those funds.
“If your children are taken care of, then you can go ahead and incorporate into your will where either a percentage or a certain dollar amount of your assets can go to charity,” says Hlohinec. “It’s a good way to plan for the future.”
Hlohinec also says some people will set up a DAF as part of their estate plan, with the stipulation that beneficiaries will decide where funds are donated.
Diversify Your Giving
No matter how much money you have to give or what financial strategy you take to do so, take a page from Scott’s book and diversify your support. Look to your own life and community to help identify causes you’re most passionate about, whether that’s gender equality, climate change, voting rights, or others.
But donating money to more organizations is not the only way to diversify your charitable giving. Integrate a giving mindset into your everyday life. Support brands that work charitable giving into their platforms while shopping for items you’ve already planned for in your budget, for instance.
And remember, money isn’t the only form of support. Giving away money is a luxury that many cannot justify in the midst of an economic recession, but Scott says to not discount other types of “wealth” that can make just as big of a difference.
Charitable organizations can “benefit from more allies,” Scott wrote, “including money, volunteer time, supplies, advocacy, publicity, networks and relationships, collaboration, encouragement, and trust.”
You don’t have to be the world’s richest woman to make a change. Reflect on the causes and issues that mean the most to you, and then evaluate the best way to help.
If you’re giving monetary support, conduct thorough research to make sure each of the organizations you support aligns with your principles and is scrupulous with the money they receive. If you have a large amount to give, work with a financial advisor or other professional to maximize your giving.
And don’t stop at cash donations or refrain from giving because you don’t have the money; look for non-monetary ways to give too, such as volunteering or advocacy. Signing a petition, attending a workshop, or donating your time are all great ways to participate.
Editor’s note: An earlier version of this article incorrectly stated the minimum donation amount for a donor-advised fund with Fidelity was $10,000. The minimum donation is $5,000.