Happy holidays! While our writers take a couple of days to savor the season, we thought you might enjoy this classic post (which originally appeared here).
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It’s December, which means you’ve probably started getting requests for donations from worthy causes. Here in the U.S., the income tax rules and the holiday spirit both nudge in the same direction: give what you can, before January 1.
Here are three tips for making gifts that matter. (And matter they do, no matter the size!)
Tip #1: Understand the tax rules.
If you choose to itemize deductions on your income tax return and you want to include your charitable contributions in the mix, then it’s important to follow the guidelines that the law, and the IRS, have established:
- the organization must be eligible (usually it will say so in the materials);
- you’ll need a receipt or some other documentation of the amount;
- and the gift must be made before the 1st of January to go on this year’s tax return.
There are other, more complicated, rules about larger gifts and in-kind donations. And if you don’t itemize deductions, you still get some credit in the standard deduction. These are calculated using the giving habits of all non-itemizing households. Check the IRS site if there’s anything unusual about what you’re planning to do.
Tip #2: Choose wisely.
Maybe you’re getting a lot of requests, more than you can afford to give. How do you get through the thicket of year-end appeals that tug at your generosity? If you don’t have a personal philanthropy plan, you can make a simple one:
- Decide on an amount you’re willing, and able, to give. The average household donates about 2 percent of disposable income each year.
- Consider the organizations you already know, and know you want to support, so you can decide how much to give to each of them. Then you’ll know how much you might have left over to respond to new requests.
- If you’re thinking of giving to a new organization, ask yourself “What does this organization do?” and “Do I admire how they do it?” With nearly 2 million nonprofits at work in the U.S., there are lots to choose from. Looking at websites, reading fundraising appeals, and searching online to see what others have said about the group are good ways to see how strongly the goals, and the methods, appeal to you.
Tip #3: Maximize.
Financial data—the sort of information many charity “watchdogs” focus in on—can only take you so far. Some causes are hard to administer, others are hard to raise money for. Spending less than counterpart organizations doesn’t necessarily mean greater efficiency, it may just mean a different approach to the problem.
There are some things donors can do to help put the maximum resources to work, though:
- Respond quickly to requests, especially to renewal notices. It costs money to prepare mailings so a quick response, even if it’s a “not this year,” is doing the organization a favor.
- Consider making fewer, larger gifts. That will focus your support on program work, not processing costs.
- Positive you won’t ever support Organization X? Ask them to take you off the mailing list so they won’t waste their money on appeals addressed to you.
Finding the money to build stronger, healthier, more lively communities is hard work. With a little preparation and some thought, your year-end gifts can support that work and make an important difference for causes and organizations you care about.