Charitable giving is at an all time high, with Americans donating about $358 billion dollars in the past year! The end of the calendar year also proves to be a popular time for people to give back.
We spoke with financial professional Sean Clark from York Independents, Inc. and he provided us with five steps to make the get the most out of your donation this year, and for the future.
5 Step Guide:
Choose the Charity
The first step is to choose the group or groups you want to give to. Don’t limit yourself to “trendy” charities, but think about the issues that are important to you. There are plenty of opportunities to give in areas like arts, education, the environment, health and for youth. You also want to choose a charity that puts as much of your dollars toward the cause as possible. Non-profits should not be spending more than one-third of their total budget on overhead expenses. You can check out charities online, and I have resources to help you out on my website, yorkindependentfinancial.com.
Unfortunately, there are scammers out there that would like to take your hard-earned donations. Ask for written information- a legit charity will be able to give you information outlining its mission, how your donation will be distributed, and proof that your contribution is tax-deductible. Watch out for charities with names that are similar to nationally-known organizations- this is a popular trick. Also - never pay with cash. Write a check or pay by credit card so you’ll have documentation in case it turns out to be a scam.
Technology is changing the way people give - both online and on your phone. I tell my clients, you’ve got to do your homework before making any donation- no matter how you’re paying. Crowdfunding websites like Kickstarter and GoFundMe are gaining in popularity. Something to consider, though, is that crowdfunding platforms typically tack on charges and fees - anywhere from 4% - 8% (according to the Better Business Bureau), so not all of your money is going toward the cause. If you’re donating through a text message, hold on to your cell phone bill with the name of the organization, the date you donated and the amount given.
Give What You Can
It doesn’t take cash to make a difference. Whether it’s clothing, an old car or the stuff that’s cluttering your basement, many worthy charities accept items as donations. The charity may put the items directly to use or sell them to raise money. Make sure you photograph or document your donation and also get a receipt. And don’t forget the most valuable resource you have to offer: you. Volunteering is a great way to give and to see the direct impact of your gift. I encourage you to look at your skills and what you enjoy doing. You may be surprised how many organizations need the knowledge and help you can provide.
Get the Tax Deduction
Getting a tax deduction is a motivator for a lot of people. But there are a few things to keep in mind: Don’t send cash; instead you should pay by check. Write the official name of the charity on your check. And make sure to get a written record, like a receipt, from the charity. It must have the name of the organization, the date of your donation and the amount. It is important to note there are additional requirements for larger donations. Also, there are maximum contribution limits based on your income, so you might want to consult a tax professional. And don’t forget, your donation needs to be in by December 31st to claim it on your 2015 taxes.
Q: How can we decide how much to donate?
I encourage my clients to think about charitable giving year-round, not just at the holidays. As you’re planning your 2016 budget, include how much you want to donate to charities. You can set aside money from each paycheck. That way, you’ll have money specifically dedicated for donations, and you won’t be tempted to spend it on your holiday shopping list!