Smart Charitable Giving
- 4 Easy Steps -
Many consider donating to causes and organizations a
valuable and fulfilling use of their money. Nearly a quarter of
Americans made charitable donations in 2015, according to
the Chronicle of Philanthropy.
But how those donations are made varies. Some individuals
have methodical gifting plans, while others are more organic
in their approach, writing checks when the inspiration
strikes and making donations at events. If you’re in the latter
category, taking a more strategic approach to your gifts can
not only increase the impact of your dollars but also ensure
you’re getting the full tax benefit from your efforts.
Here are four steps for building a gifting plan that serves your
charitable interests:
1. Determine how much you can give.
Start by evaluating how much you already give to charity. In
addition to any large donations you make, be sure to account
for items you purchased at silent auctions or events, tickets
for nonprofit fundraising dinners, and small donations made
sporadically. Then review your expenses and your overall
budget, and compare whether you have more room for
making bigger or more gifts. Your charitable giving should
come out of your discretionary funds, and not impact any
existing obligations such as paying down debt or saving for
retirement.
2. Make your gifting methodical and easy.
Perhaps you’ve already been gifting sums here and there.
However, understanding how much you’re able to gift in
total and then planning for those gifts can increase their
impact. For example, consider lumping your sporadic
donations into one larger, more impactful gift to one of
your favorite organizations. Alternately, set up a recurring
monthly donation through your bank. You’ll spread out your
donations, but ensure the end result reflects the amount of
annual support you’d like to provide to a specific cause or
organization. The added benefit of making your gifting more
planned and methodical: It will feel intentional, and possibly,
more rewarding.
3. Find ways to elevate your impact.
If you do have a charitable intent, investigate ways for
making your gifts go as far as possible. For instance, many
employers have workplace giving programs, which match
the donations you make to your favorite organizations.
In fact, 65% of Fortune 500 companies offer some sort
matching gift program. Consider gifting donations in
honor of your friends and family. Instead of spending
the usual $25 or $50 for a present, make a donation to
a cause that’s meaningful to the recipient and yourself.
Also, consider gifting assets that aren’t cash. For instance,
you can donate a vehicle to a nonprofit. You can also gift
securities. The latter comes with a few tax benefits: you
avoid paying capital gains if the stock has appreciated
since you bought it, and you can deduct the current fair
market value of the securities.
4. Keep taxes in mind.
While the intention of your gifts is to help the
organizations and causes that you love, tax deductions
provide another positive to making donations. There are
some recent changes, however, that impact donors. Under
the new tax law, you need to itemize your deductions in
order to claim charitable gifts deductions. If you plan to
do so, keep good records of any gifts you make. The IRS
will want a bank record or written statement from the
charity, regardless of the amount of the gift. Also, you can
only deduct gifts given to qualified charities. This IRS tool
can help you check whether an organization qualifies.
Finally, if you anticipate ramping up your gifting, you
might consider opening a donor-advised fund. This way,
you can give to the fund annually—and take the related
deduction in the same year—but gift the money at any
time.
By gifting to charities, you’re already making a difference.
Follow these steps to organize your gifting, elevate your
impact and make use of related tax deductions and your
gifting will go that much further.
Program Success 5 New Year’s 2019