In 2015, Americans yet again increased the amount of money they gifted to charitable causes. $373.25 billion was donated from individuals, estates, foundations and corporations, according to Giving USA: The Annual Report on Philanthropy for the Year 2015.1 Remarkably, the majority of contributions came from individuals, comprising over two-thirds of all donations.
With the holiday season upon us, many are now considering donating their time or money before the end of the year. November and December are notorious for a spike in charitable giving, due to both the holiday season inspiring many to give back and to give by the end of the year in order to file the contribution on April’s tax return.
That being said, if you do feel compelled to give back this holiday season, how do you decide where, when and how to give back?
The first step is to identify an organization to contribute to. Many choose to give to an organization they have some sort of tie to, whether that is their church, alma mater or a local organization they have grown close to. If you need a little more direction, consider exploring websites such as CharityNavigator.org or GuideStar.org.2 Both websites have a database of thousands of charitable organizations, which you can search for and sort based on a number of filters, including causes important to you and location. Both websites also examine each listed charitable organization’s financial matters, such as overhead expenses, accountability and transparency. For an even more detailed analysis of a charity, you can view the organization’s Form 990 on either database.
Once you select a cause, you may choose to contribute in the form of a monetary donation. If you choose to give this way, do your research on the organization to confirm its legitimacy first, either by looking the organization up on either website listed above or looking it up on the IRS website, where it should be listed as a tax-exempt organization. Unfortunately, fraud does occur even in the philanthropic sector—if you get a call from a charitable organization asking you to give money immediately over the phone, you may be better off doing your research first before giving your credit card number. Additionally, if you make your contribution before the end of the year and wish to list this on your tax return, be sure to retain some sort of record or communication of the donation—whether that is a bank or payroll deduction record or detailed written communication from the organization.3
Another way to contribute during the holiday season is to give through gifts. If you’re having trouble thinking of the perfect gift for a relative or friend, make a contribution to an organization or cause in their name. If you are unsure which organization they would want to support, consider giving them a gift card to donate themselves. At tisbest.org, you can buy a gift card for charity, preload the card with the dollar amount of your choice, and then give it to someone who would appreciate the gesture.4 Upon receiving the gift, the individual can then redeem the card on the website by choosing the cause they would like to support out of thousands of charities available. If you would rather give a physical gift rather than a gift card, consider purchasing a gift where some or all proceeds from the product benefit a charity or reputable cause.
Lastly, if you are unable to give a monetary gift of some sort, consider donating your time. These services are especially needed during the holiday season.
With Americans so eager to embrace charitable giving, this holiday season is the perfect time to do something and get involved. Find an organization or cause you support and figure out how to give in a way that works for you.
For more information on charitable giving strategies that fit your financial strategy, contact a financial advisor.
Written by North Star Resource Group.
1"Giving USA: 2015 was America's Most-Generous Year Ever." Giving USATM. Published June 13, 2016. https://givingusa.org/giving-usa-2016/
2Brown, Jeff. "The Best Ways to Give Money to Charity this Holiday Season." CNBC.com. Published November 13, 2015. http://www.cnbc.com/2015/11/13/the-best-ways-to-give-money-to-charity-this-holiday-season.html
3"Eight Tips for Deducting Charitable Contributions" IRS: Tax Tip 2011-57. Revised December 16, 2015. https://www.irs.gov/uac/eight-tips-for-deducting-charitable-contributions
4Williams, Jeff. "Creative Charitable Gifts for the Holidays." U.S. News & World Report. Published December 10, 2013. http://money.usnews.com/money/personal-finance/articles/2013/12/10/creative-charitable-gifts-for-the-holidays