Whether it is an extra tug on your heart and wallet after a global disaster or humanitarian crisis, or a regular part of your annual spending plan, there are a few things to keep in mind when contemplating a charitable donation.
- Be an informed giver. Don’t be afraid to ask questions when you’re asked to give, including the specific name of the solicitor and his or her relationship to the organization, how much of your gift will be used for overhead, the specific project the money will go toward, and other important information. Give only when you feel comfortable that your dollars will be going to support an organization you know and believe in. Use a service such as Charity Navigator, Charity Watch, or Give to help evaluate a charity’s financial health and efficiency so you can make an informed decision about the organization you decide to help.
- Keep the right records. For gifts of less than $250, a canceled check or credit card statement is sufficient for IRS requirements. For larger gifts, you’ll need a properly-worded receipt from the charitable organization as a confirmation of your tax-deductible contribution.
- Remember your gift can be confidential. If you prefer to have your gift remain anonymous, you can request the charitable organization not publicize your name in their annual report or donor roster.
- Get the most bang for your donation bucks. If you make a gift of appreciated securities directly to a charity, you won’t incur a capital gain on the transaction, and the charity will be able to liquidate the shares tax-free. Another way to avoid taxes on a gift is by donating part of your Required Minimum Distribution from an IRA account after you’ve reached age 70.5, rather than taking the distribution yourself and then making a gift from the proceeds.
- Consider alternative forms of giving. Don’t overlook the benefits you and your cause will receive from bequests, charitable gift annuities, gifts in-kind, endowments and many other creative forms of giving. Talk with your financial planner about the best plan for you and your family.
Your planner may be able to provide other resources or suggest ways to make your giving program especially impactful, so be sure to discuss your charitable intentions as part of your regular review meetings.