Many of us enjoy supporting causes we believe in. Whether you want to help the homeless, feed the hungry or find shelter for animals in need, there are local and national organizations that can help translate money into action. What do those engaged in charitable giving need to be aware of? This list can help!
1. Define the Cause and Mission
With so many giving options, it can be hard to determine which charity you should support. Do you want to help animals in shelters or do you want to give to a group that offers spay and neuter services for strays? The mission of an organization and how well they achieve that mission is important to know before you give.
If you have a cause you’d like to donate to but don’t have a specific charity in mind, a site like Charity Navigator offers a keyword search that can help. Simply type the cause you’re interested in into the search bar (e.g., spay and neuter) and you’ll receive a detailed list of trusted giving options by state.
2. Make Sure It’s Legit
Most charities are formed with excellent intentions. There are, however, some organizations that suffer from poor money management or are truly fraudulent. How can you be sure the organization you’re giving to is legitimate? The first step is to check out a trusted website like Charity Watch. Type in the name of the entity you want to support. If the organization’s name does not appear, you might want to consider giving to another charity with a similar mission. You can also check the Better Business Bureau to see if any formal complaints have been filed against the charity, or type the name of the charity followed by the word “scam” into Google search. Organizations that show results for either of these inquiries should be avoided.
3. Check Out the Charity’s Financials
Nonprofit entities are often masters of doing lots of good with very little money. According to Charity Navigator, most well-managed charities spend at least 65% to 75% of their budget providing programs and services—any less and a charity might not be using donations efficiently. To make sure your money is doing good for the causes that matter to you, check out the amount a charity spends on program funding compared to overhead (staffing, marketing, and fundraising). If a large percentage of an organization’s overall budget is used for overhead, consider finding another way to give. Can’t find this information? Most reputable charities list these numbers on their website or in their annual giving report (which should be available online).
4. Understand Your Goals
If you’re looking to use your charitable giving to reduce your tax burden, make sure you’re giving to a qualified 501(c)3 organization. If you’re giving money, you’ll want to be sure to retain records of your gift for tax purposes. Therefore, it’s better to donate via check or credit card. If you’re donating goods, you can only deduct the fair market value of the products and you’ll need to provide a receipt of your donation. Finally, if you plan to give your time and volunteer, know that you cannot claim your time as a tax write-off. However, if you have unreimbursed expenses such as mileage or supplies, you may be able to write those off. Check with your tax advisor to be sure.
5. Make an Annual Giving Plan
If you give to multiple organizations, it’s a good idea to review your contributions on an annual basis. Many charities now offer the ability to make automatic monthly donations directly from your bank account, which saves you the trouble of writing big checks to several organizations once a year.
Then, once a year, take a close look at your contributions to see exactly what you’re spending. You might find that you’re interested in allocating your money differently once you’ve looked at all the relevant information. Make a plan that suits you and your interests. It’s helpful to set up a folder to hold your receipts for the next year. Staying organized early will help at tax time.
Charitable giving can make a big difference in your local community. Before you decide to give, make sure your donations are being used to support the causes that are important to you. And remember, even if you’re not in the financial position to give money, your time and talents are the most valuable resources you can give, so be sure to look at volunteer opportunities too!