Science Shows That Giving Back Makes Us Feel Good.
Here Are Tips For Giving Back With Confidence:
Step 1: What means the most to you?
Identify what causes are most important to you. View your donation as an investment. They tend to be associated with something personal: a relative with a disease, your alma mater, a local agency that supported you when you were out of work. A large, national organization might be best for finding cures to diseases and crafting national policy, whereas a local one is best at providing services to your family and neighbors.
Step 2: Do Your Homework
When you are clear about your causes, pull together a list of potential charities that match those interests. Conduct basic research to confirm:
The charity is a tax exempt 501 (c)(3)
The charity’s finances. Financially healthy charities are more stable and better able to pursue their charitable mission.
The charity is accountable and transparent. Charities that are open and follow best governance practices are less likely to engage in unethical or irresponsible behavior.
Talk with or meet with a charity you are considering. At the minimum, review their website. Consider their goals and challenges. Charities that are unwilling to share in this conversation may not deserve your support or time. Take your time and don’t rush. Avoid charities that pressure you to give.
If you can’t or don’t want to do extensive research, affiliate with a trusted organization that can vet others. This is one reason donors give to United Way.
Step 3: Understand the Tax Benefits of Giving
Talk about tax benefits with your financial advisor. An added benefit to giving is that most charitable donations are tax-deductible. To receive a tax deduction, you will need the proper documentation when filing your income tax returns. The IRS requires a receipt for each tax-deductible contribution of $250 or more. Depending on the amount or type of your gift, you may need to provide additional documents with your tax form, such as Form 8283 for each non-cash donation exceeding $500.
Step 4: Decide How Much to Give and How
Financial donations are the most popular charitable gifts.. Many organizations will also accept services, property and goods. You can donate directly online, by mail, through payroll deduction, or through a donor-advised fund. Find out if your employer will match your charitable gift, further maximizing your investment.
If you give stock to a charity, generally neither you nor the charity will have to pay taxes on capital gains (as you would if you sold the stock yourself).
Donor-advised funds allow donors to make a charitable donation and get a tax deduction today. They decide which charity they'd like to support later. The donation goes into a fund that is "advised" by the donor. Many large investment companies—Vanguard, Fidelity, Schwab—offer donor-advised funds. They generally charge modest management fees, and may have a minimum contribution amount.
5. Track Your Donations
Once you have made your gift, mark your calendar with important dates of your charity’s meetings and key annual events. These are excellent ways to see your investment at work. Track the dates and amounts you gave, payment methods, and desired uses for your gift. You should automatically receive a receipt with an acknowledgement of your gift. If you don’t, be sure to follow up. Don’t rely on a cancelled check to count as a receipt.