7 tips for charitable giving

7 tips for charitable giving

It's almost Thanksgiving, which means it is that time of year when you reflect on what things you are thankful for in your life. It's also the perfect time to use your blessings and time and pay it forward by donating or volunteering to a nonprofit organization of your choice. But if you're new to donating or volunteering, the process can seem daunting. What organization should you donate to? Which one will use your donation in the most efficient ways?

You're not the only one with questions. According to the Giving USA Annual Report by the Giving USA Foundation, last year, Americans gave a record of $358 billion to charities. With giving at an all-time high, it can make it even more difficult to find that perfect nonprofit for you and your family.

To get you started, here are some tips that can help you pick the best nonprofit to support with little effort on your part.

1. Use your passions to help find the right organization. Do you love animals? Is education something that is incredibly important to you? Write down three of your passions, then use the power of the Internet to find a match to one of your favorite causes or issues. There are a plethora of nonprofits out there, both nationally and local to your area, and boiling down some of your interests can help parse down some potentials. Third-party sites, such as CharityNavigator.org, list organizations by categories, such as community development and health nonprofits. It also offers rating of organizations from fellow donors.

2. Research potential organizations carefully. There are numerous websites out there that provide oversight of nonprofit organizations. Take the time to look up a potential organization to make sure your money and time will be used efficiently. For example, Guidestar.org gives users the opportunity to review organization's 990 forms, which outline spending and salaries of an organization's employees.

3. Skip the cash. The U.S. Federal Trade Commission recommends never donating cash to a charitable organization. It is a security issue and can make it more difficult to exempt on your tax return. Records are easier to trace via credit cards or checks. The FTC also recommends never wiring money to a charity, which is a method often requested by scammers.

4. Ask questions. If an organization calls asking for funds, ask them some questions. Specifically, ask them to cite the exact name of the charity, how much will go to a fundraiser (if applicable), and the percentage of your donation that will go to the charity. See if you can call them back after some research. If the caller can't provide these details or wants you to donate immediately, you may want to take pause before donating.

5. Report bad experiences. If you encounter a nonprofit during your research that doesn't seem legitimate, report it to the FTC. According to the FTC, if a nonprofit won't provide proof that it is tax deductible, will not provide detailed information about its identity or asks for donations in cash or to wire funds, it could be suspect.

6. Cite your generosity on your tax forms. When you donate to a nonprofit that is a qualified organization by the IRS, you can itemize your deductions on your tax return. Make sure you keep records of your donations, including receipts, then use those records to report itemized deductions on Schedule A of the 1040 federal form, lines 16-19. This is only available for donated funds, not for donated time. Visit the IRS's EO Select Check page to see if an organization is exempt (https://www.irs.gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check).

7. Commit. If you found the perfect charity, are happy with the organization's results and donate frequently, consider making a long-term, annual commitment. Nonprofits rely on annual donations to maintain operations. Knowing they can rely on you as a donor can eliminate many solicitations for future donations and ensure the success of your favorite nonprofit.

November 09, 2015