Charitable giving strategies

A Smarter Giving Strategy This Holiday Season

Well, the holiday season is here. Your calendar is probably full of seasonal activities, like buying gifts for loved ones, attending holiday parties, or even decorating your home and preparing for family celebrations.

If you’re like many Americans, this is also the time of year when you increase your volunteering and charitable giving efforts. Many charities rely on holiday giving to support their year-round efforts. In fact, a 2012 survey from GuideStar found that more than 50 percent of charities get over half their donations in the last three months of the year.

While the holiday season may inspire you to ramp up your giving, it’s also wise to take some time and plan your giving strategy before you open your wallet. You likely want to be confident that your donation will be used to support your cause of choice. You also may want to maximize potential tax deductions.

Believe it or not, some contributions aren’t deductible. Also, not all nonprofits are run efficiently, and a large portion of donations are used to fund overhead, not charitable efforts. The good news is that effective planning can help you avoid these pitfalls. Below are a few tips to guide your planning this holiday season.

1.) Make sure your nonprofit is registered for deductible donations.

Just because an organization is a nonprofit doesn’t mean donations to the group are automatically deductible. Charitable organizations who want to accept deductible donations must be registered with the IRS. Depending on your state, they also may need to be registered with a state agency.

Before you make a donation, your target charity should be able to provide documentation showing that your contribution is eligible to be deducted. You can also contact the IRS or your state agency to ask for verification on the organization’s registration. If you can’t confirm that the charity has taken the required steps to register with those agencies, you may want to direct your donations elsewhere.

2.) Research your charity’s efficiency and effectiveness.

Many people assume that when they give money to a nonprofit, that money is automatically used to fund the charity’s cause or purpose. For example, if you give to an organization that helps the homeless, you likely expect that your funds will be used to buy blankets or food or to fund a shelter.

However, that’s not always the case. Just like businesses, some charities are more effective than others. In charities that aren’t efficient, a large portion of donations may go toward staff salaries, administrative expenses, and other overhead.

If you want to be confident that your donation will be used to support your desired cause, take time to research the charity’s effectiveness. There are a number of websites, such as Charity Navigator or GuideStar, that provide ratings and analysis on how nonprofits use their funds. Do some analysis and make sure your donation will be used in the way you wish.

3.) Give time instead of money.

Perhaps you’re retired and struggling with a limited income. Or maybe you’re devoting as much money as possible to retirement savings in the final years of your career. If so, consider ways to give other than through a donation.

Many charities are desperate for volunteers. By volunteering you could provide a valuable service and also work hands-on with the cause that you care about most. You generally can’t take a tax deduction for your time, but you can deduct expenses you accumulate through volunteering, such as mileage, purchases, and more.

Ready to develop your giving strategy? Let’s talk about it! Contact us today and we can help you analyze your goals and develop a plan. Let’s connect today and start the conversation.



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