Archive for the ‘Charitable giving’ Category

Guide to Giving

The December 2012 issue of Real Simple magazine includes a helpful guide with 5 tips on charitable giving.  It recommends doing some research on the charity of your choice before making a donation. Familiarize yourself with the organization:

  1. Understand the mission: should be clearly stated on the charity’s website with specifics.
  2. Verify the group’s non-profit status: its 501(c)(3) IRS status can be checked out at Guidestar.org. Without the designation, your contribution may not be tax-deductible.
  3. Know the charity’s spending ratio (the percentage of the budget that is spent on programs and services): go to CharityNavigator.org to view a financial analysis including spending ratios. A ballpark figure of 75% or higher is desired.
  4. Accountability and transparency practices: the governing board should include at least 5 members independent of the charity.  Go to the Better Business Bureau Wise Giving Alliance at give.org to find out.
  5. Ask about results: most mid to large charities conduct self or third-party assessments and should be forthcoming in sharing the findings.

Outside of the websites listed above, you may want to ask a representative from the charity the same types of questions and for a copy of the annual report.

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Giving Wisely

December is the time of year when many people feel the desire to contribute to charitable organizations, an act that can be more effective when the financial side is taken into account.

First, the tax considerations. Remember that donating to qualified non-profit organizations is tax-deductible only when itemizing your deductions. What triggers itemizing for most people is the expense of home mortgage interest and property taxes because the combined payments are generally higher than the standard deduction allows.

For the official view of the tax side of charitable giving, read the article on the IRS website called 9 Tips for Charitable Taxpayers.  It details the need to keep good records, get written acknowledgments, pay attention to the special rules for donating property such as cars and used items, and cautions against deducting the cost of  entertainment or food at fund-raising dinners.

Choosing the charity that fits your personal giving ethic can be time consuming.  For some assistance, visit Charity Navigator, a helpful site that uses a four star rating system to evaluate organizational efficiency.

See some of  the Top 10 Lists such as 10 Charities with the Most Consecutive 4-Star Ratings, 10 Highly-Rated Charities with Low Paid CEOs, and 10 Charities in Deep Financial Trouble.

The site has many other resources including the excellent article  Top 10 Best Practices of Savvy Donors which offers several suggestions to increase the effectiveness of your contribution.

One idea: Concentrate your giving. When you make larger gifts to fewer charities rather than small gifts to more charities, your giving has a bigger impact.