Following the excesses of Black Friday and Cyber Money comes the more altruistic Giving Tuesday, and, while Americans gave a total of $410 billion to charity last year, approximately 30 percent of donations are made between Giving Tuesday and Dec. 31. Three-quarters of the charitable donations come from individuals like you, but before you give your hard-earned dollars to your favorite charity, do your homework to make sure your money is going where you think it is.
First and foremost, you want to make sure that you don’t donate to fake charities. While most charities are legitimate, some are scams designed to get your money without using it for any charitable purpose. Charitable organizations are nonprofit organizations whose primary objectives are to serve the public interest or the common good. Under the Internal Revenue Service rules, a registered charity is generally exempt from paying income tax, except under specific circumstances.
Fake charities take advantage of people’s compassion and wish to help others by posing as real charities and stealing money. You can check on the IRS website or with your state’s attorney general’s office to see if a charity has any complaints against it. The IRS calls fake charities one of its “dirty dozen” of tax scams. “Fake charities set up by scam artists to steal your money or personal information are a recurring problem,” said IRS Commissioner John Koskinen. “Taxpayers should take the time to research organizations before giving their hard-earned money.”
Charity due diligence
Even if they are not fake, charities differ in their effectiveness and in the way in which they allocate donations. Before you make your donation, there are some things you should learn about the organization. One of the first pieces of information you will want to know is what percentage of the donations a charity receives actually go to its stated mission. Some portion of the money that comes in has to go to administrative costs such as employee salaries, rent, supplies and fundraising, but some organizations use more than 99 percent of donations for their mission while three-in-10 charities only use 75 percent toward their cause. Use Charity Navigator or GuideStar, nonprofit organizations that evaluates charities to see the stats. Once you’ve decided that a charity is above-board and effective, look at its website to drill down on its stated mission, goals and how it goes about achieving them. Does the organization that rescues animals euthanize them if they are not adopted after a certain point? Does the organization that provides meals for the homeless require religious affiliation? There may not be anything wrong with a charity’s goals, but they should jive with yours.
The money part
Once you have done your research and decided to make a donation, you will have to decide how much you can afford to give, whether you will you give all your money to one cause, to several causes or to several organizations serving the same cause, and whether you will make a one-time donation or a repeating donation.
The average American gives 2.6 percent of their income to charity every year, but you should only give what you personally can afford. One way to make your money go further is to give to your chosen charity while there is a matching incentive. Often, there are certain times of the year when a fund or philanthropist will match your gift with their own donations, sometimes dollar-for-dollar or even twice or three times what you give.
Finally, you will want to keep track of how much you donate over the course of the year. Under the new tax laws, charitable deductions are still deductible on your income taxes, but only if you itemize. And, remember, the standardized deduction is now $12,000 for an individual and $24,000 for a couple, so all your itemized deductions will have to be greater than that to make itemizing worthwhile. And, to qualify for a tax deduction this year, money must be donated by Dec. 31.
You have decided on your cause, made sure that the organization is legit and matches your beliefs, and that it is effective in meeting your shared mission. You’ve decided how much you can afford to give and whether your donation will be one time or repeating. Whether your cause is homeless kids or hurricane relief, giving to charity can benefit you as well. Studies have shown that donating money to charity makes you feel good about yourself! Giving back to those in need gives the donor a sense of personal satisfaction. So, please give wisely, but give.
* With one caveat! If you are struggling beneath a wide debt-load, it perhaps is inadvisable to give to a charity. Although, yes, we might be tempted (or perhaps even guilted) into giving to charities, there are legitimate reasons to abstain from the practice. Make sure that you have your own house in order before you take on other peoples’.
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