Charitable Donations – Maximize the Impact of Your Gifts for 2013
If you’re working on your 2012 taxes wishing you had amassed more deductions, now is the time to better position yourself for next tax season.
However, for the majority the tax benefit is secondary. Most people give because they want to and they give to organizations they believe will use their money in a way that benefits others. What’s not so well known is that just because an organization is a nonprofit, doesn’t mean most of your donation goes to the work of that nonprofit.
According to the Nonprofit Almanac, there are 2.3 million nonprofits registered with the IRS. That’s one for every 175 citizens. Most nonprofits depend on donations for a large part of both charitable work and operations. With that many nonprofits to choose from, how do you know where to send your charitable dollars?
Obviously, you want to be certain that most of the money you donate goes to whatever purpose your chosen charity serves. Some charities are better at this than others are.
Here are a few ways to maximize your donation dollars moving forward.
Keep it Personal
There are legitimate needs all around you – right in your city, perhaps in your neighborhood. If you have no firsthand knowledge of someone who needs help, ask friends, family, or coworkers.
What’s best about this type of giving is that it is direct and you can see, firsthand, the net impact of your charity. One hundred percent of your donation goes to the intended recipient. According to the IRS, these types of donations are not tax deductible but seeing the direct benefit of your gift may make up for that.
Religious Organizations, Shelters, and Schools
Churches and other religious organizations often have food and gift drives at various times during the year. Shelters are always in need of products like batteries, blankets, garbage bags, and just about anything else that most people think of as basic living supplies.
In many communities, schools or school districts have food drives designed to help children who attend that school or school district. Of course, money is always accepted and this is another way to make sure that 100 percent of your donation helps others. Further, these types of donations are usually tax deductible as long as you get a receipt.
There are numerous local nonprofits in your community and they need your help. If you believe in keeping your money local, search for a local charity that matches your passion. Just like you would with local businesses, start with word-of-mouth. If you are part of a civic or religious organization, it probably has partner community charities it works with.
Well-known, national charities such as The American Red Cross, American Cancer Society and United Way are always safe bets. If you prefer to give to charities making a national or global difference, your possibilities are endless but watch for “sound-alikes.” These are so-called charities with names that sound similar to national organizations. Often, these charities have huge administrative costs and very little of the donated funds go to a worthy cause.
Say “No” to Telemarketers
There is no kind way to say it. Charity scams are everywhere. Unsolicited requests for money – just like unsolicited attempts to sell something – are usually a bad deal. In the case of a charity, it’s even worse because the money you donate ends up lining someone’s pockets and doesn’t do the good you envisioned.
Answer the Door with Caution
If it’s a neighbor kid selling for the scouts or collecting cans of food on behalf of a local church that’s one thing. If it’s a stranger selling magazine subscriptions, chances are very little of the money you pay will go to a charity.
Solicitations on behalf of the local police or fire department are tough calls. If you want to give, but have questions, call the organization (or department), and ask if someone is soliciting donations with their knowledge.
Be Clear on Your Tax Status
Tax exempt and tax deductible are not the same. An organization can be exempt from paying taxes but due to the type of nonprofit, you cannot deduct the donation at tax time. Also, make sure you get a receipt if you intend to deduct your gift.
Check Out the Charity
Sites like Charity Navigator review and report the percentage of donations that goes to charity work versus the amount spent on administrative and advertising costs. Any nonprofit spending more than 25 percent of its revenue on administrative and marketing costs is cause for concern.
Concentrate Your Gifts
If you want to make a real difference, do not spread your money out between multiple charities. Find an organization you really believe in and support it exclusively.
Keep Those Records
Get a receipt and put it in a safe place. (Or scan it.) If you lose it, you cannot deduct your gift.
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