Charitable giving really picks up toward the end of the year, most visibly with Giving Tuesday, which is of course the Tuesday after Cyber Monday, which is the Monday after Black Friday, which is the day after Thanksgiving.
I don’t know if it’s the cold weather, or the actual lessons learned from the holidays, but everyone seems to dig a little deeper into their pockets for charities during the holiday season. It doesn’t hurt that the IRS allows us to deduct charitable donations.
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. 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 good record keeping is the key to ensuring you get the same tax credit as everyone else did for their generosity.
Here are some other tips for making your charitable gift:
- Check to make sure you haven’t donated to them already this year. One of my clients was overwhelmed by donation requests, and feeling guilty for not giving more. I explained that someone who is on a fixed income could not be expected to give as much as in her earning years — and that she had already given to many of the charities earlier in the year.
- 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. 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.
- Reputable charities spend at least 75% of their donations on programs and services. Be wary of any organization that claims to use over 75% — that’s just not possible.
- 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 such low-tech threats 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.