How To Make The Most Of Your Charitable Donations This Year

Forbes Finance 5 days ago
It's the season to give. Donation jar with money
It's the season to give. Donation jar with money

Just as Black Friday encourages shoppers to spend, #GivingTuesday encourages those same people to start the holiday season off right through charitable giving. Whether you make regular donations throughout the year or are new to it this December, the world of charitable giving is vast and can be difficult to navigate. Below are tips to get started and make the most of your giving this year.

What’s Important To You?

#GivingTuesday Ambassador and CEO of National Philanthropic Trust, Eileen Heisman says the first step in making a donation is to determine what’s really important to you. She says it’s important to differentiate the causes you want to give to from the causes people are asking you to support. “I think a lot of people don’t really know what’s important to them. If your three best friends have asked you to give to three different causes, you may give to these causes but haven’t fully examined what’s in your heart.”

She adds that this will probably change over time. When you’re younger, you have limited experience. What’s important may be based on what you see directly in your community or from a documentary. As you grow and have new experiences, start a family, travel and get more educated, your interests change; you may find other causes that you care about. So continue to evaluate what’s important to you over the years.

Create A Budget

A budget for giving will look different as you age. Younger people just starting their careers, or saving for a home and family, have less disposable income so their giving may not be as strategic. If you’re a young adult looking to give back, look at what you have left over after your bills and determine how much you can afford to donate. From there you can make a plan to give it all to one cause, spread it out to a few, allocate throughout the year or give it as a lump sum.

The “giving budget” will look different with age as disposable income typically increases as you get older. You may have more than you need to live on and therefore can be more strategic around the causes you want to support. Maybe you choose three causes and give one large gift to each. Or you may choose to make regular contributions towards one charity throughout the year, and set aside an additional amount that will go towards charity as needed, like a hurricane relief fund.

What about those unplanned donations outside of your budget, such as when the cashier at the checkout of your favorite grocery store asks if you want to add a donation to your order? Heisman encourages giving in any form. “Whatever it takes to get the donor to the table works. You can use any tool for giving; if you haven’t given before, maybe giving at checkout will start you on a path to giving more down the road.”

Do Your Own Research:

Before you give money to any charity, do your research. Websites, google searches, newspaper articles and bios on the charities leadership provide a good overview. In addition, Heisman recommends calling the charity directly and tell them you want to learn more about their operation. She also suggests digging even further, and review the organizations’ IRS Form 990. The 990 is the reporting form that many federally tax-exempt organizations must file with the IRS each year; it includes information on the nonprofit's mission, programs and finances.

How To Identify A Scam

The above research will help you determine if a charity is a scam or not. Additionally, charity watchdogs like BBB Wise Giving AllianceCharity Navigator, and CharityWatch investigate charities to be sure they are doing what they promise.

When it comes to scams, you have to be extra vigilant when someone calls or emails asking you to donate money to their charity. Whether affiliated with charitable giving or not, the rules are always the same. Never, ever give money to someone over the phone. Never click on a link emailed to you if you do not know the sender. And with the exception of The Salvation Army, this goes for anyone on the street corner asking you for donations. You have no idea who these people really are, and it’s always best to be safe. If you are interested in giving to one of these charities, go to their website and donate directly there.

When it comes to scams or the misuse of donated funds, there is a lot of media attention on how charities allocate their funds, and how much money goes to the actual cause. While important to know, Heisman feels there has been an unfair “demonization of overhead” over the past 15 years. As she explains, overhead is what allows charities to do their work. It provides money for strategic planning, staff education, the necessary equipment, benefits to keep employees engaged, etc. This being said, there are cases where companies have allocated funds inappropriately, but Heisman says this is rare. “Sometimes you’ll hear about companies misusing funds, but it’s too bad the headlines are so negative. It’s very rare that these scams do happen, but when they do they cause a lot of negative feelings.”

Bottom Line:

As long as you do some basic research before donating your money, there’s really no wrong way to give back. Every dollar counts and each cause matters.

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