Tis the season for generosity

During the holiday season, many Americans look for ways to give to others. Whether it is through donating food to a local food pantry, collecting coats and gloves for school children in need, serving a meal at a homeless shelter, or opening their checkbooks, it is the time of year when they are the most generous.

According to Charity Navigator, in 2016, Americans donated more than $390 billion to charity, and donations from individuals account for more than two-thirds of all charitable giving. While 32 percent of all donations can be attributed to people giving to their local churches, Charity Navigator reports around 31 percent of the total giving was online in the month of December to a variety of charitable organizations.

It is apparent that people are more generous during the holidays, but it is wise to know where that hard-earned money is going.

The websites for Charity Watch (www.charitywatch.org) and Charity Navigator  (www.charitynavigator.org) offer insight into the top-rated charities based on the percentage of funds the charity actually receives compared to the amount used for administrative expenses. They dig deep to determine the top charitable organizations based on fiscal responsibility, accountability and transparency. The best charities generally spend 75 percent or more of their budgets on programs, which helps contributors know the money they donate is going to help the cause.

How to choose a charity

  1. What issue/cause do you care about the most? There are numerous charitable organizations, so determine what cause you most want to help. Perhaps you most want to help people directly, such as feeding homeless children, rather than giving to research for a particular disease. You need to decide what means the most to you.
  2. Ask around. Friends or family might be the best place to start. They may have similar interests and are aware of good organizations, or ask a professional about related charities. For example, ask a veterinarian about pet-related charities.
  3. Spend time researching. Do your homework and find out more about organizations that support your favorite cause. The Charity Watch and Charity Navigator websites are a great place to help you make that choice.
  4. If you can’t decide, then it’s alright to give to more than one charity.

Consider how you give

  1. Keep your budget in mind when giving. It is possible to be too generous and over-giving might hinder your capability to give again in the future. If you can’t give much, that’s alright. Anything helps.
  2. Do you itemize your deductions? If you don’t, then considering the tax benefits are a waste of time if you take the standard deduction. If you do itemize, you want to be sure your total deductions are larger than the standard deduction.
  3. Not all contributions to charitable organizations are tax deductible. Do your research. This is where the Charity Watch and Charity Navigator websites are of great help. If you want to be able to deduct your contribution, the charity must be a tax exempt 501(c)(3).
  4. You can give more than money. If funds are tight, consider giving your time. According to Charity Navigator, in 2015 more than 62 million Americans volunteered for a total of 7.9 million hours of service. Or, instead of discarding those gently used clothes, furniture and books, give them to local charities. It helps the environment and benefits others. Be sure to always get a receipt when you drop off donations, they are tax deductible.
  5. Do you want to give for something specific? Some organizations send out gift lists around the holidays, and you can choose to buy a particular item to help vulnerable families around the world.
  6. Always keep giving receipts with other tax documentation. According to the Internal Revenue Service, you must
    maintain records to prove your donation qualifies.

Be cautious of crowdfunding

A relatively new concept, crowdfunding is the process of funding a project by raising money, usually through a website. It originally caught on as a way to raise funds for entrepreneurial projects from family, friends and acquaintances, without having to ask face-to-face. Websites such as Indiegogo, the first online platform founded in 2008, and Kickstarter, founded in 2009, helped individuals raise money for their creative endeavors.

Much of the growth occurred as a result of websites such as GoFundMe and YouCaring, which changed the face of the crowdfunding model by offering a new way to raise funds for personal needs and humanitarian efforts. According to a 2015 Los Angeles Times article, GoFundMe and YouCaring both experienced “huge increases in medical fundraising in the last two years.” Crowdfunding to help pay for medical bills now represents the largest giving category for both websites.

Sadly, as the popularity of crowdfunding has increased, so have fraudulent campaigns that play on emotions and take advantage
of those with generous hearts.

Crowdfunding sites try to vet each fundraiser, but it is impossible to verify the information of everyone. In fact, both GoFundMe and YouCaring have terms of service statements regarding the verification of information published on their sites. It is especially difficult during times of natural disasters when the volume of campaigns can greatly increase in a short period of time.

Take extra care when making a crowdfunding donation. To help reduce the chance of being taken advantage of, only donate to the campaigns of those individuals you know and can trust.

This season, as you prepare to spread holiday cheer and goodwill, with a bit of homework you can sit back and enjoy the time with family and friends, knowing your generosity has helped others.

Sources: Charity Watch and Charity Navigator