For most of us, charitable giving — to church, schools, charities and more — is not only an important part of our finances, it’s an important part of our value system.
How do you make certain the money you give to charities is being put to work efficiently and effectively? Obviously, every family is going to have different criteria on how they judge their charitable giving, but here are a few thoughts on how you can be sure you’re giving smartly.
If you’re giving to national charities, be sure to check with one of the highly respected charity rating services (see sidebar). They can provide great details on how the charity is funded and where those funds are spent.
Keep in mind that these services often use slightly different criteria when grading charities, meaning their exact ratings may not quite match up. It’s worth taking a few minutes to check your charity across multiple platforms.
Local charities can be a bit trickier to measure. Most national services cover only the largest of regional charities. The BBB Wise Giving Alliance, though, offers thousands of local charity ratings through its regional affiliates.
Of course, a great way to judge local charities is to donate more than money — donate your time. By diving in and getting to work, you can learn how the charity uses its resources and do some good at the same time.
If your charity is too new to be rated by these services, you can also verify its tax-exempt status with the IRS ( www.irs.gov/Charities&NonProfits/ExemptOrganizationsSelectCheck).
Give Your Way
Once you’ve decided to give, it’s usually smart to donate directly to your charity of choice. There’s really no need for a middle man. Normally, if a professional fundraiser is involved, especially a phone soliciting fundraiser, only a fraction of the funds raised will actually make it to your charity There is also a new breed of charities that allow you to give directly to the person in need. Watsi and Kiva, for example, both let you read profiles of individuals who your donation (or in the case of Kiva, your loan) will benefit.
While these organizations still require the same amount of due diligence before donating, they can also provide a unique opportunity to customize your giving.
One way to increase the impact of your giving is to not do it alone. Many companies offer powerful gift matching opportunities where your employer will match your gift up to a certain amount. Check with your human relations department to see if your employer has such a program.
Another approach is to donate stock instead of cash. This strategy will often let you avoid paying taxes on any appreciation while also deducting the full value of the stock. Alternatively, if your investment has depreciated, you can claim a loss and deduct a charitable contribution equivalent to the proceeds.
Be sure to run any stock donation plans by your tax advisor before jumping in — these do require some specific paperwork.
Many states offer targeted tax benefits for certain types of giving. For example, 529 college saving plans, specific charities and other types of giving may come with a tax credit instead of just a deduction.
Do your research. Learn what local opportunities are available to you. Of course, if you need help with this, the Helmstar team is here to help.
Giving is great. But it shouldn’t be treated lightly. In fact, giving is just a different type of investment. A smart giving strategy can be a powerful force for you and the causes you care about.
Get Smart: Use these services to evaluate before you give:
Charity Navigator: charitynavigator.org
American Institute of Philanthropy: charitywatch.org
Better Business Bureau Give Wise Alliance: give.org