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Charitable Donations : 10 Ways to stretch your Dollar

My husband and I both want to give as much as possible to charity. In an ideal situation, we would give away most of our income and live a minimal lifestyle. But we are not there yet and have a long way to go especially since we desire to buy a house (more on that tomorrow). We have a % of income we allot for charitable donations and we try to give it to causes that are dear to us and where it will have maximum impact. Over the years, I have looked for ways to put every cent of our charitable donations budget to good work, as I do with our own savings. Here are some of the ideas to stretch your dollar in ways that benefit the charity as well as you.

Giving charity the maximum dollar

  • Research the charity : Not all charities are equal, money given to some charities will go directly to the cause, while some charities might spend 80c of every dollar for administrative causes and give only 20c for the cause that is close to your heart. There are various charity watchdog organizations to help you figure this out for a particular charitable organization. One of my favorites is Charity Navigator. There are others -  Charity WatchBetter Business Bureau Wise Giving Alliance, Guidestar, GiveWell, Great Nonprofits,Jumo, Charity Guide.
  • Skip the middle man : You might have got the phone calls on behalf of some charities. Usually I will never give to charities that cold call via a call center. But if you are moved by the charities cause, just ask for the charity’s name/website and ask the caller to not contact you again and remove you from their calling list. Research the charity later to make sure the claims are real and if you want, donate directly to their website or write a check to them directly. If you donate via the call center person, only part of your money goes to the charity, the rest goes to the call center company.
  • Employer matching : Make sure to check if your employer has a charitable contribution matching program. A lot of companies have this and they have their preferred list of charities. If your charity is on that list, it would be better to follow the procedure and get the matching donation from the employer. This usually involves either submitting the receipt to HR or donating via a company portal or a direct deduction on every paycheck.
  • Sites matching donation : During the Haiti earthquake, a lot of companies were matching donations and credit card companies were waiving fees. I remember specifically donating with a Discover card which I never use regularly just because Discover was matching the donation I gave. Make use of opportunities like this, this gives double value to the charity with only negligible extra effort on your part.

Give even when you don’t have money

  • Shopping on the Internet via charity portals : You will shop like you regularly do and these sites donate a portion of the profit from the purchases made through the site. They usually offer a number of charities/causes to choose from, when you assign the beneficiary of your purchase profit. Some of these site include GreaterGood, GoodSearch, GoodShop and iGive.
  • Give your time: If you are strapped for cash, give your time. Charities are looking for volunteers as much as money. This can be very fulfilling, sometimes more than giving money and you can meet some great like minded people too. You could also donate good condition goods that you are not using anymore.
  • Contribute Skills/expertise : If you are good with computers, volunteer your computer skills and help with the IT needs, if you have accounting skills, find out if the charity can use a hand with bookkeeping. You are a plumber, handyman, a cook… Set aside some time weekly or monthly to assist the charity you support.

Get the maximum eligible tax benefits

  • Donate appreciated securities : If you have stocks that have appreciated and your have held the stock for more than an year, donate the appreciated securities instead of donating cash that year. You will save a lot more in taxes by doing this. The reason for this is, you won’t have to pay the capital gains taxes on the transfer of the securities and you can also take the deduction for the full value of the donation.
  • Get the receipt : This is a no brainer. ALWAYS get a receipt for donation. No receipt, no deduction and you are missing out on the tax deduction.
  • Donate life insurance : If you have a life insurance policy that you don’t need anymore, consider donating the policy to a registered charity. You must assign all the rights in the policy to the charity and give the policy itself to the charity. The charity should be the owner as well as the beneficiary. In this case, you can deduct the cash surrender value of the policy in your taxes and if you continue to pay the premium, you generally may deduct the premiums as well.
  • Donor advised funds : I don’t have much knowledge about this, it is one of the to-do items for this year. But I have read a lot of claims about how this is a very tax savvy move and can greatly benefit the charity too. Some other tax strategies include private foundations and charitable lead trust. I will write a post about these as I learn more.

We usually have 2 charities to which we donate throughout the year and 2 charities for year end donations. We have so far stuck with contributing cash/time and are looking into donating some appreciated stock this year. How and why do you give to charities? Do you have any creative way of giving that will maximize the benefits for the charity and the gift giver?

{ 13 comments… read them below or add one }

krantcents

Although we donate some money, we like to give clothes and things to Goodwill. This year I am volunteering which is a stronger commitment than donating. I plan on starting the next ninety days.

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Suba

We plan to volunteer more too, one of our goals for this year.

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Squirrelers

Very thorough post, Suba…as usual, you’re detailing your topic in a comprehensive manner.

All good points, with a few jumping out at me:

1) Research your charity. I definitely do this, as in some charities a big percentage of money goes to administrative type fees. Plus, you really want to make sue that the cause you think you’re helping is actually what’s being helped directly.

2) Give even when you don’t have money. Agree totally. I have read one case a kid who himself was faced with a terminal illness was focused on helping feed hungry people. While that’s off the charts generosity, I’m sure many of us with much easier lives can give something – even if it’s not money and is time/expertise.

3) Tax Benefits – I always get a receipt. That said, I hadn’t really thought of the alternative options you mentioned (appreciated securities, life insurance). Goes to show that there are creative ways to give that can be even more of a win-win.

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Suba

Squirrelers, yes the donating securities is a win-win for sure. It does takes a little more time/effort than donating cash though.

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Aloysa

We do support good causes such as Haiti and such. But mostly we donate our clothes, books, household items to local shelters. And we awlays remember to get a receipt… :-)

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First Gen American

I started becoming active on the volunteer board at work, so I also give time in addition to money. I like seeing how a little bit of my time can go a long way and the direct impact it has. I have no idea what or where my money went for Haiti. The place is still a disaster even though people pledged millions in just a few days.

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Suba

We gave to 2 charity for Haiti, even though we keep getting junk mail inviting for web conferences for briefings on how the money is spent I never attended any of them. They are all during the weekday. I still have no idea what/how it was used. That is the main reason we stick with just 2 charities we know better. End of the year I mainly fund the projects for teachers using donors choose. The teachers are very prompt in sending reports on whether they executed the projects.

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101 Centavos

Good post as usual, Suba. Good point on donating securities, that had not occurred to me. I’ll be looking hard at that come tax time at the end of the year.

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Suba

101 just a word of caution, start looking a bit more earlier than year end :) It takes longer than just writing a check and the deal has to be done (everything transferred) by Dec 31st to take the deduction.

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Everyday Tips

I used to hate when my employer basically forced everyone to donate to a particular charity. I prefer to give to the charities that use a greater percentage of donations for the actual cause instead of admin things like this particular charity did.

I donate to a couple charities that work to cure a couple diseases that people I care about are afflicted with. I donate a ton of household items to Salvation Army. I also tend to donate a lot at funerals where it goes to the a scholarship fund for the family, especially when I know the family is needy.

Time is something I hope to donate a lot of in the not-too-distant future.

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Suba

True. My husband’s employer used to match to a charity (a big one actually) but we decided to give it to a different charity because it was not worth it for us to give to some charity that we didn’t approve of. Even though the money would have doubled for that charity. Luckily they never forced us. I would have been livid if they did something like that.

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Invest It Wisely

One thing I would like to do this year is some volunteering. I haven’t done it in a while, and sometimes it feels better to help out directly rather than giving money. You can know and feel directly whether what you’re putting in is going to good use.

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Evan

The life insurance option is not utilized enough because a lot of charities are short sighted with their endowment so they don’t advertise the option(or simply can’t wait for the pay out). If the charity’s base is large enough and everyone got a cheap term policy they would eventually receive a MUCH larger payout.

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