Perhaps one of the goals you had for this year was to be a more charitable person or maybe there is a cause you feel strongly about and to which you would like to contribute. Donating to charities is admirable and can benefit both the contributor and the recipient in many ways. Many organizations depend solely on donations and your contributions are greatly appreciated, so a lot of good can be done in our communities and around the world.
Here are some tips to help you make sure your charitable donations are given in the safest and most practical way:
Pick a Passion:
When you are deciding which charity to select, allow your passions to drive you toward where to donate. If you have a deep emotional connection or opinion on a certain cause, you will feel best about contributing to promote it.
Big or Small Organization:
There are usually multiple organizations that support the same causes, so should you go with a bigger one or a smaller one? Big organizations can do a lot of good when enough contributions are made, but small organizations might be able to do more immediate good for individuals or families. Be proactive and ask them how your donation will be spent before giving.
One of the perks of donating to a charity is being able to write off the donation on your taxes. In order to do so, you will need to make sure you are giving to a 501(c)3 organization. This means they have registered with the IRS as a tax-exempt organization. Keep in mind you have to make the donation by December 31st to be able to deduct for that year.
NOT Tax Deductible:
As you choose to make charitable contributions, keep in mind not everything will be tax deductible. As mentioned here, you cannot count fundraising donations (like gofundme campaigns), money or goods to private individuals, or political contributions as tax deductions.
If you want to donate money, how much should you give? Most don’t donate more than 2% of their annual income, but the amount is completely up to you. Keep in mind if you donate more than 20% of your adjusted gross income, there may be limits on what you are able to deduct on your taxes.
Know What Counts:
When you participate in a charitable function, how much of that counts as your contribution? The answer is the amount you paid, minus the value of any services or goods you received in exchange. For example, if you attend a charitable dinner for $50 and the value of the dinner is $20, your charitable contribution is $30.
Keep a documented list of the fair market value of the items you donate. Remember, if an item is valued at more than $5,000 you must have a written appraisal of the fair market value at the time of donation.
Get a Receipt:
No matter what or where you donate, be sure to keep track of the date of donation, the amount donated, and the organization name. Many organizations will provide you a receipt for your donation. This is for you to have on file in case of an audit.
Unfortunately, there are people who take advantage of the kind hearted. When you are researching organizations, or if you are approached by someone for a donation, the following signs could alert you the charity is a scam:
-Won’t provide details on who they are, their mission, costs, or how donations will be spent
-Uses a name that closely resembles that of a well known organization
-Tries to get you to give cash immediately or to wire money
-Guarantees sweepstake winnings in exchange for a donation
Ask Questions and Be Smart:
Do not be afraid to ask questions to ensure your donation is safe, will be used the way you prefer, and that your own information is protected. Always ask for the name, address, and phone number of any charity. Ask how they use donations and about their transparency policy. For your own safety, never send cash donations and never wire money. Also, never provide your credit card number to a charity with which you are not familiar.
As you consider various options for charitable giving, do your research so you know that your donation will truly be used to help others and that your personal information will remain safe.