In 2022, charitable donations in the US reached nearly $500 billion. 1  And yet, despite rising generosity, it’s important to acknowledge that, much like the practice of saving money, it’s not always easy to give charitably, even when you have the desire to do so. The study of behavioral finance explains why it can be difficult to accomplish our well-intentioned financial goals. Behavioral finance, which joins human psychology and economics, seeks answers to the why and how around financial decision-making. If you're considering how to increase your charitable donations, employing behavioral strategies can help you accomplish your goals. Here are a few ideas:

Notice the Impact

It’s well documented that there is joy in giving. In one study, participants self-reported higher levels of happiness when they were told to spend $5 on others rather than $5 on themselves. 2 

As an advisor, I’m enthusiastic about the services and tools we can provide to make charitable giving tax-efficient and simple. That said, the joy of giving may feel less palpable when your advisor sends a check from your IRA, and focusing on the benefits you receive from giving may reduce the satisfaction you may otherwise get from giving.

To combat this diminished happiness effect, be sure to identify the purpose of your giving and consider the compounding effect of your gift. By focusing on the outcomes of your giving and the fellow donors you’re partnering with to make a difference, you may find a stronger emotional reverberation from the giving. This could be as simple as reading the nonprofit’s newsletter, volunteering with the organization, or asking to take a tour of the facility.

Give Yourself Permission

One of my favorite examples of behavioral finance involves snacks. In one experiment, scientists had participants select a food two weeks in advance—either a healthy snack (fruit) or chocolate. Most participants selected the healthy snack in advance. However, when participants were offered the option to switch at the time of the event, most participants chose chocolate. 3  I relate to this!

We can apply this understanding of long-term vs. short-term decision-making to our financial choices as well. When making choices well in advance, we’re more likely to make decisions with a long-term perspective. When we’re making a near-term decision, we may be tempted to choose an easy solution or inaction—like not making a portfolio withdrawal—that isn’t necessarily aligned with an earlier-stated goal of donating to charity.  

If you’re hesitant to increase your charitable giving because you don’t feel like you have sight on how it fits with your long-term plan, check in with your advisor about giving yourself permission to give more. Our team can provide perspective on your capacity for charitable giving beyond your regular spending, (and beyond your intentions for heirs, where applicable), and its impact on your financial independence and family spending.

Use Your Experience

The penalty for withdrawing retirement assets early helps us save. Psychologically, the fees create a hurdle to accessing assets that are designated for long-term needs. While working, many people employ the behavioral trick of mental accounting by considering retirement assets off-limits.

And yet, when it’s time to use those assets in retirement, it can be emotionally difficult. You may feel anchored to the habit of accumulation, or you may not feel comfortable using assets intended for retirement living for charitable giving.

Consider dedicating a specific account or asset for charitable giving to use the same psychology that worked to accumulate assets to spend them down. For some, a Donor Advised Fund is a tax-efficient vehicle that acts as a guide to spending down assets. Other clients find earmarking a certain stock position for charity reduces the concern around giving too much.

There are many ways mental accounting can be used to reverse the habit of saving. For one client, who has a well-funded Donor Advised Fund and end-of-life charitable requests but was having trouble giving as planned, we recommended spending down his Donor Advised Fund by age 71. By assigning a spending down goal, he felt empowered to use the fund to its full potential.

Think of Yourself as Charitable

Studies have shown that the financial decisions people make are influenced by the labels they ascribe to themselves. For example, research shows that the follow-through for completing an exercise routine, like an evening run, is higher if you have an identity as a runner rather than holding the belief that “I run sometimes.” By forming an internal identity—by describing yourself as a runner or holding a social identity as a runner by joining a running group—you’re making the associated behavior psychologically easier. 4 

We can apply this to charitable giving to help form the habit of giving. If you consider yourself generous, you begin to form an identity—and a commitment—to giving. For example, by joining a group or a board with a fundraising mission, you’re creating a social identity as a philanthropist, which also can help solidify your commitment to charitable giving.

Here to Help

For many of our clients, understanding the psychology behind their financial decisions is very impactful and is an important next step in helping them realize their goals. To learn more about behavioral finance strategies that can be deployed to support your financial goals, talk with your CCM advisor.


  1. https://philanthropy.indianapolis.iu.edu/news-events/news/_news/2023/giving-usa-total-us-charitable-giving-declined-in-2022-to-49933-billion-following-two-years-of-record-generosity.html
  2. https://www.psychologicalscience.org/news/releases/the-joy-of-giving.html
  3. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1968995
  4. https://thedecisionlab.com/reference-guide/economics/identity-economics/; https://smlr.rutgers.edu/sites/default/files/Documents/Faculty-Staff-Docs/CommitmenttoSelfIdentification.pdf

NOTE: The information provided in this article is intended for clients of Carlson Capital Management. We recommend that individuals consult with a professional adviser familiar with their particular situation for advice concerning specific investment, accounting, tax, and legal matters before taking any action.

PLEASE SEE IMPORTANT DISCLOSURE INFORMATION.