Inside: This guide to charitable giving will help you make smart choices when you donate money.
The holiday season inspires giving and so there are more charitable donations at the end of the year. You have probably even noticed that you are more inclined to give to charity now as the holidays and the end of the year approaches. If so, you are not alone.
Before giving your time or money, read these tips on how to research and make the most of your donations by learning to give to charities the smart way.
Research charity ratings
I am going to guess that you don’t want to waste your hard earned money on a charity that will use half of the donation towards sending out mail and holding office parties. So, what do you do?
Research. You want to make sure your money is going to have the biggest impact possible for the cause you choose. There are probably a few well-known charities you can name off the top of your head, but will they make the best use of your money?
I have found three of the best charitable giving sites that provide great information when trying to find a charity that will put your money to good use. Each of these sites strives to ensure the charity manages finances responsibly. They look at whether the finances are transparent and if the charity has appropriate oversight. They also check to see if there is evidence of the impact the charity makes. Essentially, can the charity back up its claims?
BBB Wise Giving Alliance
This site will let you know if the charity you are interested in meets these accountability standards. However, it does not rank the charities.
Charity Watch is a site where you can read reports on top-rated charities in several categories. To get access to information on additional charities, you need to become a member to access further information. The cost of membership helps support their research.
This is my favorite resource for checking on charities and finding new ones where I can donate money. Like Charity Watch, Charity Navigator has charities listed in many different categories. You can browse these different categories to find charities for causes you wish to support.
Maybe you want your money going to support programs such as
- feeding the hungry
- providing clean water or housing
- supporting veterans
- supporting animal shelters
- educations programs
or any of dozens of other categories. This site will help you find charities that are using funds efficiently for the stated causes.
The operating costs for a charity can vary depending on the type of work it is doing. Because of this, make sure you compare a charity to others doing similar work rather than with ones with different goals. For example, you would want to perhaps compare two clean water charities, but not a clean water charity with a charity that aids veterans. The kind of work a charity does and how it achieves its goals can greatly affect expenses.
The watchdog sites will, in general, let you know how expenses for a charity compare to similar charities.
Lastly, if you hear unbelievable/outrageous claims regarding a charity or its leaders, research the claim. The sites above along with Snopes are useful tools to debunk some claims that circulate the internet each year.
Set a budget
Charitable giving may be something you have forgotten to add to your budget. If you plan on giving funds, start adding this to your budget. If you haven’t budgeted for charity, there are other ways to donate.
Ways to give
There are many ways to give to charitable organizations. The simplest is to either write a check or donate money online to the charity of your choice. For your own protection, do not give money to phone solicitors. Ensure you initiate any phone call before giving.
There are ways to increase the impact of your donation. Rather than making a dozen small donations, try making a just a few larger donations. This has a bigger impact for the charities.
Workplaces will often match charitable contributions you make, so ask around at work and find out if there is such a program in place and the details on the match program.
Some charities have fundraisers where there are donor match programs in place where another person will match your donation up to a given dollar limit. That is another great way to stretch your donation dollar.
Don’t have cash to give? Some charities, such as Goodwill, will take donations of clothing and household goods that are in good condition.
And finally, you can volunteer for various charities. Groups are often in need of volunteers willing to donate time and skills.
Related post: How to Be Charitable on a Tight Budget
Benefits of charitable giving
While you should give out of kindness, it doesn’t mean you need to ignore the tax benefits of giving. If you itemize your tax deductions, a donation of money or items to a qualified charity might enable you to take a charitable contribution deduction against your income taxes.
Always remember to document your donations. Keep copies of canceled checks or credit card statements along with the written acknowledgment of the donation with your tax records. If you are ever audited, you will need this documentation.
It may seem like a bother, but with online donations, you often get an email you can print that can serve as the written acknowledgment of your charitable donation. If you take items to Goodwill or similar charities, write down what you take and the quality of the item on a piece of paper and staple that to the donation receipt. We keep a folder for the next year’s taxes and just drop this documentation into the folder as we gather the information.
There are various limits on donations that can be made, but they are quite high. If you are seeking to donate an item of significant value, stocks, or a large sum, check with your accountant for any gotchas.
Basically, don’t mess with the IRS.
Giving to charity is a great way to support your community and the world. Hopefully these tips will help you give to charities the smart way.
What are some of your favorite charities?