Monday, December 26, 2016

Tips for Charitable Giving

Late December is probably the most popular time of the year for charitable giving. People are still in the holiday spirit, and those who itemize deductions may be thinking about ways they can reduce the year's taxable income.

There are so many worthy causes out there. How do you choose which ones to support? And all charities are not created equal; some are better stewards of your donation dollars than others.

Here are some tips for deriving the most benefit from your charitable contributions:

1. Don't respond to solicitations by telephone, unless it is a charity you recognize and plan to support. Ask the caller to send you some literature or refer you to its website (which should end in .org, not .com). A legitimate charity will not mind. The crooked ones will insist that you give them your personal information over the phone. Keep in mind that many fake charities have names that sound similar to the legitimate ones.

2. Make your gift online by credit card or mail a check so you'll have a record of it. Most charities will immediately send a thank-you email confirming receipt of your online donation, with the date and amount—documentation you will need to support your tax deduction. And try to give directly to the charity, rather than through a paid fundraiser, who will most likely keep a portion of your donation.

3. Research the charities you are considering supporting. Charity Navigator ( assigns ratings of one to four stars based on the organization's financial performance, accountability and transparency. You can see how much its leaders are paid, how much of its income goes to programs—as opposed to administration and fundraising—as well as how the charity compares to other organizations doing similar work. You may be surprised to find that some of the better known charities don't score very well.

4. Charity Navigator only rates charities that have at least a million dollars in revenues, so many small, local charities will not have a score. Check Guidestar ( for copies of the organization's tax return (Form 990), mission statement, customer reviews, and programming/governance information shared by the charity.

5. Ask if your donation is tax deductible. The organization's IRS status as a 501(c)(3) or similar should be clearly noted on its website, receipts, and/or other materials. If you're unsure, visit the IRS website to verify. Also, if you accept a "thank-you gift" such as a tote bag, dinner, magazine subscription, etc., in exchange for your donation, the fair market value of that "gift" must be subtracted from your tax deduction.

6. Think about supporting small, local charities so your donation dollars will stay in your community. Many of these organizations are run entirely by volunteers and thus have lower overhead costs than the national powerhouses headed by CEOs making six-figure salaries. Also, you might be able to visit the site, meet and talk to some of the volunteers, and observe how well the charity executes its programs. And if you can't help with your checkbook, perhaps you can spare a few hours of your time?

What charities do you support, and how do you choose them? I'd love to hear your comments.

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