Picking and choosing charities can be daunting. It seems like everyone wants a piece of us this time of year, and the sheer number of newsletters and solicitations makes them impossible to tame.
Many people already have relationships with organizations that advocate for causes near and dear to them. However, some people are new to the game and other people just want to mix it up and get sexy with it.
And that’s ok because of websites that look into the finances of nonprofits, like Charity Navigator, CharityWatch, or GuideStar. They each have a different spin, and that’s why I made a cheat sheet for the untethered donor to get started:
- Donating more than $300 in a year means that your donations must be itemized for the IRS. This minor hassle is the first step in deducting it when you file.
- You may not want to stretch your dollars. To make the most impact, many people prefer to concentrate their charity spending on one charity.
- Give Directly and know that “tax exempt” does not always mean “tax deductible.” As always, consult your accountant if you have questions.
- If giving is advantageous to your tax situation, make sure to talk to an accountant before you start making the donation(s). Professionals can often answer questions without even batting an eye, whereas you or I would need an hour in front of Google to figure it out.
- Do not be swayed by emotional appeals. Good charitable giving practice includes understanding the finances of the organization and the cold, hard facts surrounding it.
- Look out for organizations that sound like a respected charity’s name. Think: “March of Limes,” instead of March of Dimes.
There is another tax-advantageous way to give that exists in a class of its own. Donor-Advised Funds, or DAFs, are giving accounts established at a public charity. They allow donors to have some say over how their donations will be spent, as well as an immediate tax deduction.
With the IRS seeing a huge drop in revenue, the rumor mill is saying that there will be more audits of…regular people like us. If you’re going to give, make sure you do it right. We can help. Contact us for more information