Smart Giving: Use Your Head When Making Charitable Donations

The last months of the fiscal year—and the coming winter holidays—make this an excellent time to consider tax-deductible charitable donations. By starting now, you will have time to make smart decisions about your donations, while still ensuring that your giving is done before end-of-year.

More than ever, not-for-profit organizations need your support.  Deciding who to support, how to donate and how much to give are decisions you need to make based on solid information, not just emotions. Luckily, it’s easier than ever to research charities and to make donations.

Choosing Who to Support

It’s important to support organizations whose values and mission mirror your own beliefs, whether by advancing social causes, providing research and education or promoting shared beliefs. While a charity’s goals and services are an important consideration, it is not the only thing to take into account.  By being informed, you can ensure that your contribution goes to a legitimate source that will make effective use of the donation.

Tips for Giving

1. 1. Make sure the organization is legitimate. Choose charities you know, and don’t be fooled by similar-sounding names. Before making a donation, request information and research the organization. Any legitimate charity will willingly send information and won’t pressure you to give on the spot.
2. 2. Find out how much of every dollar donated goes to programs. Efficient and effective charities spend 65% or more of the donations they receive on programs and services—rather than on salaries, fundraising and administration.
3. 3. Never give over the phone. While some legitimate organizations do conduct telemarketing, in most cases the telemarketers themselves keep more than half of the money they collect. Even if the person calling is a volunteer for a legitimate charity, don’t provide your credit card information over the phone. Ask the person to send you information so you can review it and make an informed decision.
4. 4. Make sure your donation is tax-deductible. Some non-profit organizations are not charities, and your gift may not be deductible.
5. 5. Consider giving more money to fewer organizations. Giving a smaller amount to many different groups whose mission you appreciate might seem like a good way to support a variety of causes. However, the processing time and fees associated with taking a donation (whatever the amount) might reduce the effectiveness of your gift. Your gift may have a bigger impact when you choose fewer charities and give each a larger amount.
6. 6. Never give cash. Both for record-keeping and to help ensure that your money is going to legitimate organizations, don’t give cash. Either mail a check to the organization or give online directly through the charity’s web site (not through email).
7. 7. Segment your giving. A neighbor’s charity run or a relative’s school fundraiser is a great opportunity to support people you know, but consider it just one part of your overall giving strategy.
8. Keep records. Obtain and file receipts and documentation for any donations you make. For a donation of more than $250, request a formal receipt from the charity to confirm your donation.
9. Think locally. You can help your local community by contributing to a local group or charity. Community foundations are conduits for all sorts of local giving.

Consult An Advisor

Beyond monetary donations, there are many ways to support the charities you believe in. A professional advisor can provide information on annuities, endowments, gifts in-kind and more.

Online Resources

The Internet makes it easier than ever to research charities and make informed decisions about who to support.

Research charities, from spending habits to reviews to tax filings:
Charity Navigator: http://www.charitynavigator.org/
GuideStar: http://www.guidestar.org/
American Institute of Philanthropy: http://www.charitywatch.org/

Find local charities:
Community Foundations: www.communityfoundations.net/