How
to Give Wisely and Well
Giving
to charity has never been easier. You can donate the old-fashioned way--by
mail--but you can also donate online, by text, or through social networking
sites. According to the National Center for Charitable Statistics, over 1.4
million nonprofit organizations are registered with the IRS. With so many
charities to choose from, it's more important than ever to ensure that your
donation is well spent. Here are some tips that can help you become both a
generous and wise donor.
Choose your charities
Choosing
worthy organizations that support the causes you care about can be tricky, but
it doesn't have to be time-consuming. There are several well-known organizations
that rate and review charities, and provide useful tips and information that can
help you make wise choices when giving to charity (see sidebar). To get you
started, here are some questions to ask:
- How will your gift be used? It should be easy to get information
about the charity's mission, accomplishments, financial status, and future
growth by contacting the charity by phone or viewing online information.
- How much does the charity spend on administrative costs? Charities
with higher-than-average administrative costs may be spending less on programs
and services than they should, or may even be in serious financial trouble. Some
charities who use for-profit telemarketers get very little of the money they
raise, so ask how much of your donation the charity will receive.
- Is the charity legitimate? Ask for identification when approached by
a solicitor, and never give out your Social Security number, credit card number,
bank account number, account password, or personal information over the phone or
in response to an e-mail you didn't initiate. There's no rush--take time to
check out the charity before you donate.
- How much can you afford to give? Stick to your giving goals, and
learn to say no. Legitimate fundraisers will not try to make you feel guilty,
and will be happy to send you information that can help you make an informed
decision rather than pressure you to give now.
Harness the power of matching gifts
Many
employers offer matching gift programs that will match charitable gifts made by
their employees. You'll need to meet certain guidelines--for example, your
employer may only match your gift up to a certain dollar limit--and the charity
may need to provide information. Check with your employer's human resources
department or the charity to find out how you can maximize your donations
through a matching gift program.
Put your gifts on autopilot
If
you're looking for an easy way to donate regularly to a favorite charity, look
into setting up automatic donations from a financial account. When donors
contribute automatically, the charity benefits by potentially lowering
fundraising costs and by establishing a foundation of regular donors. And you'll
benefit too, because spreading out your donations throughout the year may enable
you to give more, and will simplify your record keeping.
Look for new ways to give
Although
cash donations are always welcome, charities also encourage other types of
gifts. For example, if you meet certain requirements, you may be able to give
stock, direct gifts from your IRA or other retirement account, real estate, or
personal property (but check with your financial professional to assess
potential income and estate tax consequences based on your individual
circumstances). You can also volunteer your time, using your talents to improve
the lives of others in your community. And taking a "volunteer vacation" can be
a fun way to involve your family and meet other people across the country or
world who share your enthusiasm for a particular cause.
Use planned giving to leave a legacy
You
can leave an enduring gift through your estate. For example, you might leave a
will bequest, give life insurance, or use a charitable gift annuity, charitable
remainder annuity trust, or charitable unitrust that may help you give away the
asset now, while retaining a lifetime interest--check with your financial or tax
professional regarding any potential estate or tax benefits or consequences.
Keep good records
If
you itemize when you file your taxes, you can deduct donations you've made to a
tax-qualified charity, but you may need documentation. Keep copies of cancelled
checks, bank statements, credit card statements, or receipts from the charity
showing the charity's name and the date and amount of the contribution. For
donations or contributions of $250 or more, you'll need a more detailed written
acknowledgment from the charity. For more information and a list of
requirements, see IRS Publication 526, Charitable Contributions.
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