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 Watch, Better 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?