Charitable giving occupies an important place on your moral compass. You want to give to the dozens of great organizations vying for your donation, but you know it’s impossible. Here are a few things to remember when navigating the sea of end-of-year solicitations that deluge your mailbox:
- Check to make sure you haven’t donated to them already this year. This goes back to the untold, hidden joys of good record-keeping. I was with a client recently who was overwhelmed by donation requests, and feeling guilty for not giving more. I first explained that someone who is on a fixed income should be granted a little slack. Second, I told her that she had already given to several of the charities that were now asking for a year end donation – and that she could expect to receive dozens of more requests from each charity.
- Charitable contributions are due by the end of the year, but they do not have to clear before January 1st. If paying by check, the date on the check is what determines when the donation was made.
- Beware of charities that try to make themselves look like the heavy hitters who have been in business for years. Very often their names are slight variations of legitimate charities, and this might be enough to fool someone with limited eyesight, for instance. This is especially true after a disaster happens: Up to 60% of the 4,000 charity websites that emerged in the wake of Hurricane Katrina were found to be phony.
- The reputable charities spend at least 75% of their donations on programs and services. Be wary of any organization that claims to use over 75% of their revenue on programs and services.
- If you give over $250 to an entity and wish to use it as a deduction, you must obtain a letter of confirmation from the organization(s). In some cases, like when donating to a thrift store, you will be given a generic receipt to fill out yourself. Most charities are diligent about providing proof of your donation, but again, good record keeping is the key to ensuring you get the same tax credit as everyone else did for their generosity.
- Never give to a charity that solicits your donation over the phone. Giving out a credit card number over the phone is a disaster waiting to happen for a variety of reasons, including complicated scams as well as such mundane dangers as someone eavesdropping.
- Donor-advised funds provide immediate tax-savings and are excellent for people who are unsure of where to spend their charity dollars.
Luckily there are tools available to help you evaluate your options for giving, such as CharityNavigator.org and GiveWell.org. And don’t forget that, as far as the IRS is concerned, it really does not matter if you give all year or only at the end of the year.