If you want to make a difference and help others to do the same, this ultimate charitable giving guide is your MUST-READ lecture – especially if your mailbox is overfilled with donation requests from charitable organizations, and you need to pick and choose which one you need or want to support. Did you know that America is one of the most charitable nations, giving away over $373 billion in 2016?
The non-profit organizations that you may donate to are dependent on your charitable contributions to support favorite causes. And, while the contributions you make are for the greater good, many savvy investors understand that charitable contribution is also an investment.
Why You Should Donate to Charities?
Reasons for donating are as varied as the contributors themselves. Besides furthering the goals of a charitable cause close to your heart, charitable giving can soften your personal brand, be a touching tribute or legacy for a loved one, or create numerous tax advantages for investors. A charitable tax write-off sows guaranteed returns, and a lifetime of charitable giving can help you with estate planning too. There are several ways that a charitable contribution is an investment in your financial portfolio. For example, opening a Charitable Remainder Trust (CRT) may help you turn non-income generating assets and properties profitable. Charitable investments may also fund life insurance, better providing for heirs. Additionally, private foundations offer reduced estate and income taxes, a charitable bequest may reduce gift taxes and donor advised funds allow assets to grow, tax-free.
How to Donate to Charities
Screen Them First It’s the season for charitable giving, but beware. There is never a shortage of scandals involving charitable foundations misusing funds or turning out to be outright scams. You want to make sure your dollar is stretched as far as possible, which means fully screening the charity you choose to invest in. Luckily, there are more options now than ever for screening the charities of your choice.
- charitynavigator.org. give.org – documents legitimate charities including governance and cost-effectiveness. Check these websites to see if the charity you are thinking about giving to is a scam.
- http://www.myphilanthropedia.org/ – ranks the most cost-effective charities by cause.
- The Charity Navigator app – provides quick reference checks
- GuideStar – collects the tax returns of charitable organizations. Here you can see executive compensation, mission statement, and if any money went to the family or business of the executive, among others.
When to Donate to Charities
For tax purposes, there is not necessarily a best time during the year for charitable giving. However, the urge to give is typically strongest around the holidays. As the holiday season coincides with year-end, this time of year is often best if you are looking to limit your tax burden.
Takeaway
To implement all the key points mentioned above, it’s the best to have a charitable giving plan. Researching the charities that serve the causes close to your heart and working with your financial advisor to develop a plan around giving will help you maximize the benefit of your donation, both for the organization of choice and for your personal investment. For a better understanding of how charitable giving can both help your investments and minimize your tax obligations, for more information or a complimentary consultation contact the financial planning, wealth management and investment services team at Hudson Companies today.