Charitable Giving Tips

How to Donate Smart

Charity-Jar-headGiving money to charity is a great way to help out a great cause. The best part is that you don’t have to be rich to lend a helping hand—even $20 or $50 can help make a difference for some organizations. So the question becomes “Where should I donate?” Before you give, keep a few things in mind.

Know your charity

Even if you’re giving to a group whose name you recognize, be sure to check it out online using a site such as Charity Navigator or Charity Watch. Sites like these let you know how much the group takes in and, more importantly, where all of that money goes. That last part is a key for most people, as they want to know that their money is going to help, rather than to administrative costs.

Understand tax implications

Just because a group is “tax exempt” doesn’t mean your gift can be deductible on your next tax return. For example, many politically-based groups might be tax exempt but donations to them cannot be deducted. And if you receive something in return for your gift—whether a new TV or a t-shirt—the only thing you can deduct is the difference between the value of the item and your gift. (So if you give $25, but get a $5 t-shirt, you can only deduct $20.) Check with your tax professional if you have any questions or concerns about what you can and cannot list.

Don’t cave to pressure

It’s simple: the vast majority of high-quality not-for-profits appreciate the donations they receive and will not pressure you into giving. If you do feel like that is happening, let the organization know that it happened and why (or if) you chose to take your donation elsewhere.

It’s not all in the name

Some organizations have impressive name recognition, such as the American Red Cross or Habitat for Humanity. Sadly, there are organizations out there that will use a name similar to a well-known group, whether it’s just to get noticed or even to get some “accidental” donations. Check to make sure you’re not getting two groups confused, and to make sure the group is even legit, before giving.

Don’t include strings

Sometimes we might want our donation to go something specific a group does, such as clinical research. While that is a good way to honor someone, or might be a necessity in some cases (e.g., a donation to the Red Cross for a specific disaster), sometimes it puts too many limits on what the organization can do. Instead, thoroughly research the group you want to donate to and make sure you trust their financial decisions. If you’re not sure you do, then you might want to give to another charity.

Everyone has a cause they support, whether it’s wounded warriors, environmental issues, or animals. The key is to give with your heart while using your head.

Mark Dye

About the author: Mark Dye

Mark Dye has been writing articles, recording podcasts, and putting together books on personal finance for nearly a decade. His work has been recognized by the American Bankers Association and the Institute for Financial Literacy, and received an 2011 APEX Grand Award for Writing. Follow Mark on Google+.

Contact: Mark Dye


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