Farrell: Generosity is the best investment in community you can make

'Tis the season for thinking about charitable giving.

The charitable tax deduction was a major factor behind the habit. Gifts made before the end of the year are deductible.

Yet the tax break is less significant following the major tax law legislation signed in late 2017. The big increase in the federal standard tax deduction reduced the number of taxpayers able to take direct advantage of the charitable deduction.

The good news is we continue to give even if the tax code is less supportive than before and despite the negative impact of higher inflation rates on household incomes. According to Giving USA, individuals in 2021 gave about $327 billion, up 4.9% from the previous year or 0.2% after adjusting for inflation.

The flatness in inflation-adjusted giving by individuals isn't as disappointing as it might appear. Charitable giving in 2020 rose sharply as people responded to the trauma of the pandemic. The gains held in 2021.

Giving money is only one way people respond to community needs. The Value of Volunteer Time report by the Independent Sector and the Do Good Institute calculate volunteers typically contribute some $200 billion to their communities.

The number of hours volunteered has probably declined somewhat because of the risks associated with COVID-19. Nevertheless, it's admirable how many people continue to volunteer for causes they believe in.

Taken altogether, people support a broad range of community activities with their money and their time, including the arts, food kitchens and religious institutions.

Organizations like these are "monuments to community," a wonderful catchphrase by historian Daniel Boorstin that I always quote at this time of year. "They originate in the community, depend on the community, are developed by the community, serve the community, and rise and fall with the community," he writes.

There are plenty of ways to give money before year-end. Cash is simple and effective and, if you're willing and able, making monthly automatic payments to charitable organizations is smart (and one I've embraced).

For those with greater resources and financial advisers to tap, there are other approaches to consider, such as donating appreciated non-cash assets (think stocks) held longer than one year and satisfying an IRA Required Minimum Distribution with a Qualified Charitable Distribution (QCD).

Thing is, whether you give time, money or both, generosity is the best investment in community you can make, even if the tax code no longer directly benefits your efforts.

Farrell is economics contributor to the Star Tribune, Minnesota Public Radio and American Public Media's "Marketplace."