10 Tips for Donating to Charity (Donating to Charity)

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donating to charity

This article originally appeared on LearnVest.com.

Giving to our favorite charities is a worthy way to end the year. Not only can buying gifts for a family in need or helping out at a soup kitchen on Thanksgiving day be fun, it can also offer financial benefits.

For most people, it makes sense to give at the end of the year so their money can earn interest throughout the year before they donate it. (More here on when it doesn’t make sense to donate at the end of the year.)

However, it’s only good for our finances if we stay within our giving budgets. Today we’ll break down how to choose which charities or causes to donate to, how to do so without going in the red, and the impact giving will have on your taxes.

Budgeting for Charity

As you consider how much to give, the first thing to remember is that everyone’s financial situation is personal. For most people, donations don’t exceed 2 percent of their total annual income, but decide for yourself whether this works for you. Those who tithe often donate 10 percent or more, but this is best planned and saved up for during the year.

When determining your budget, go with an amount that you can handle without dipping into your emergency fund or retirement savings. If your giving budget is smaller than you’d like, never fear. There are plenty of ways to get creative and give in non-cash ways—time, services or other in-kind gifts (more on that here).

Pick What’s Important to You

When you consider where you might give your money, think about your top priorities. Are you passionate about the environment or saving a particular type of animal? Has something happened in your personal life that inspires you to donate to a particular cause, such as searching for a cancer cure or mentoring a group of at-risk youth? Also, would you rather give to a cause that has a local impact or a global one? If you’re looking for a worthy local cause, you can do searches by topic, location or both on sites such as Charity NavigatorCharity Watch and the Charities Review Council.

Narrow Down the Kind of Organization

Consider whether you want to give to a big charity or a small one. At a large organization, your individual contribution might be one of thousands, but the combined impact could effect great change. On the other hand, a small organization may not have a broad impact, but your gift alone could make the difference for one individual or family.

Do a Search, With Your Mission in Mind

Keeping those things in mind, conduct your search on the previously listed sites for organizations whose goals align with yours. Then, head to the organizations’ individual websites to look at their programs and see if they do work in areas you feel passionate about. Also, pay attention to the holiday giving drives that they launch: Is there an end-of-year match that will double your dollars? Will you receive a nice calendar that will remind you of the organization throughout the year? Do you even see a type of donation that would make a great gift for someone (i.e. adopting one animal of an endangered species)?

Cross Your Ts

Make sure that all the charities are proper 501(c)3 organizations, meaning that they are registered with the IRS as tax-exempt organizations. You can find out by searching for the organization in the IRS non-profit charities database, which has the complete list of organizations holding 501(c)3 status. If your chosen charity is not on this list, your contribution won’t be tax-deductible.

Get the Biggest Benefit for Your Gift

Lastly—and this is the trickiest thing to gauge overall—try to give to an organization that actually gets the results you seek. You can get a sense of effectiveness through the websites listed above as well as through the Better Business Bureau, all of which rate charities based on factors such as how they spend their budgets, how much they spend to raise funds and how transparent their finances are.

If you still feel you need more information to make a good decision, call the organization itself to find out what they are accomplishing in your area of interest, or if they have special holiday fundraising programs to which you can donate. Doing so will also help you feel sure that their work aligns with your own interests.

If You’re Donating Money…

There are two ways you can go: If you’re trying to decide how much to give to each organization, allocate based on your dedication to each cause—i.e. more for causes you care more about—or find out what amount is needed to accomplish one particular task at the organization. For instance, if you want to help a family in a developing country and you see that $50 is the amount needed to help them dig a well, then give them $50. If the local food bank says that $25 could feed a family of four for Thanksgiving, select that amount.

Be sure to get a matching gift from your company if it offers that as a perk. Company matches are a quick and easy way to increase your impact. Other companies have charities they’re affiliated with and encourage employees to donate—some even going as far as only matching gifts to that charity. If your employer falls in this category, consider your priorities and budget, then decide for yourself whether it makes sense for you to go with your employer’s chosen cause or on your own.

Lastly, if choosing between sending a check or attending a charity event, opt for the direct donation. As Charity Navigator puts it, “Special events, such as galas and golf outings, are notoriously inefficient ways to raise money for a charity. Not only are these events outright costly (invitations, catering, entertainment, and so on), but planning a fancy ball often diverts staff time away from the charity’s mission.”

Also, a straight-up donation is better for your taxes. If you itemize your deductions, you’ll be able to deduct the full amount of your donation, whereas, if you were to attend a gala, you wouldn’t get to write off the full amount of your ticket, because the costs associated with the gala ticket (dinner, alcohol, etc.) are not counted as part of your donation.

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