Is This The Year You Start A Charitable Giving Habit?
December 18, 2017It’s the time of year for giving. In our home, as in many households, that giving includes charitable contributions. While we make some contributions during the year in response to events, we make our planned gifts during the holiday season. Here’s how we think about it:
Charitable giving is a financial habit
While I can’t prove this scientifically, I do believe that money has a “flow,” and that sharing some of the money I make with others shows gratitude for blessings in my life. In fact, giving away money can actually improve your budget by forcing you to manage your financial resources more mindfully. Making charitable gifts has always been something my husband, Steve, and I agreed upon in our relationship. In fact, when we got married we asked friends and family to make donations instead of sending presents.
How much to give
Personally, we aim to donate a set percentage of our income after taxes. We include charitable donations which are tax deductible, as well as contributions which aren’t (such as contributing to a GoFundMe campaign for a neighbor with unexpected medical bills). If you’re new to giving, start with a small percentage goal, like 1 to 2 percent of your take home pay, or 5 percent of your discretionary income.
Tax deductions
If you itemize your taxes, you may take a tax deduction for money or property donated to a qualified organization. According to IRS guidelines, you may generally deduct up to 50 percent of your adjusted gross income, but 20 percent and 30 percent limitations apply in some cases. Don’t forget to print out copies of the donation acknowledgements – you’ll need to save them in case your tax return is audited.
Where to give
Where you give is an entirely personal choice. If you’re new to charitable giving, consider asking yourself, “what problem do I most want to help solve?” as a starting point for your research. You may make more impact by making larger contributions to fewer organizations. Set some guidelines for yourself. For example, we focus our giving on education, international health and food security.
You’ve got plenty of charities to choose from. According to the non-profit directory Guidestar, there are 1.8 million IRS recognized non-profit organizations in the U.S., including 501c3 registered charities and other nonprofits. Some people give a set percentage to their religious organization. It’s a good idea to check out any organization on Guidestar or Charity Navigator to see how well they make use of donors’ contributions.
Giving stocks or mutual funds
Lucky enough to have bought Apple stock fifteen years ago? Give some shares of that instead! If you have stocks or mutual funds which have appreciated in value, donating shares instead of cash allows you to make the deductible donation without paying taxes on the capital gain. See IRS publication 526 for all the rules.
Check for matching donations
Chances are, if you work for a larger company, your employer will match employee charitable contributions, up to a certain dollar limit. Some employers have guidelines for what types of contributions they will match, so check your benefits website for more details.
When you can’t afford to give much – or anything
If you’re buried in student loans or credit card debt, or at a place in your life when you just don’t have any surplus income, please give yourself permission not to make donations. If you can swing it, give your time instead. Most of those 1.8 million non-profit organizations run on a combination of contributions of both money and volunteer effort. Don’t know where to start? Check out VolunteerMatch or Volunteer.gov.
The bottom line? Giving is habit worth developing.
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