“Giving Tuesday” is a chance to help charities tackle worthy causes
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Since early 2020, most of us have obviously focused our energy and attention on the global pandemic.
As we emerge from this perilous time, it’s important to remember that the last 20 months have had a profound impact on charitable giving. It has been widely reported that small charities nationwide have faced significant losses in charitable giving as donors cut back during the Covid-19 health and economic crisis.
However, the urgent need to solve problems like climate change, homelessness and heart disease and cancer has not slowed. As we look forward to a brighter future, we must join together to support causes that benefit humanity.
“Giving Tuesday,” which has been a big boost for non-profits since its start in 2012, is a global day of charitable giving that takes place the Tuesday after Thanksgiving (this year, on Nov. 30). With Giving Tuesday comes an opportunity to make a difference for the causes we all care about.
If you find yourself in the fortunate position of being able to make a charitable gift this holiday season, you’ll want to make sure your contribution has the biggest possible impact.
How do you select a charity for your donation to make the greatest impact?
- Plan ahead and research causes that are important to you. Use a non-profit evaluator such as Charity Navigator, the largest evaluator of charities in the U.S. Look for organizations that have the highest rating of four stars. Give additional consideration to charities with consecutive four-star ratings, as this means the organization consistently meets criteria for transparency and fiscal responsibility.
- Look for non-profits where you can get the biggest bang for your buck. See how much of your donation actually benefits the mission you wish to support. For example, if you make a $100 gift to cancer research, is 100% of your contribution benefiting the mission, or is that percentage significantly less? Best-in-class organizations carefully manage operating expenses to ensure the vast majority of donor dollars are going toward on-the-ground impact. Both Charity Navigator and GuideStar, another of of the larger charity evaluators, often provide this information if it’s not readily available on the organization’s website.
- Consider scale. Some charities can maximize their impact by pooling resources. For example, donating money to a food bank enables more people to benefit from nourishing meals by taking advantage of economies of scale when purchasing groceries in bulk. Think about what you want your contributions to achieve locally, nationally or globally — and which organizations are best positioned to achieve it.
- Remember, the biggest or best-advertised charities are not always best-in-class, so do your homework.
What about the tax implications?
- This year is a great year to give. In 2021, individuals who do not itemize their deductions receive a $300 deduction for cash contributions to qualifying charities; couples, meanwhile, receive a $600 deduction. Previously, the deduction was limited to $300 per tax return — this means a married couple filing jointly can double their deduction for 2021. Because it’s an above-the-line deduction, this amount reduces your adjusted gross income, which can qualify you for additional tax breaks. Donations must be made by Dec. 31 to take advantage of the tax credit.
- Keep in mind that financial decisions you make between now and Dec. 31 can have a significant effect on taxes you pay.
- Taxpayers who are age 70½ or older can transfer up to $100,000 from a traditional individual retirement account tax-free to charity each year, as long as they transfer the money to the charity directly. This counts toward your annul required minimum distribution and will reduce the size of your IRA, which will reduce both future required withdrawals and your tax bill.
- Those older than 59½ (to avoid an early withdrawal penalty) who take withdrawals from retirement plan accounts in 2021 may use deductions for their charitable donations to help offset income tax liability on the withdrawals.
How to pick a reputable charity
Here’s a handy checklist for choosing a reputable charity:
- Make certain the organization’s mission is clearly stated.
- Verify the organization is making strides toward fulfilling its mission. Look at the percentage of donations going to overhead vs. mission.
- Review the organization’s 990 or audited financial statements to ensure sound financial practices are utilized.
- Take a look at the organization’s leadership, board of directors, advisory board and other governing bodies to see the composition of individuals making key decisions for the organization.
With your support, your favorite organizations will not only help your community but also make a positive contribution to humanity overall by helping to alleviate problems like poverty, the climate crisis, access to education or disease.
Giving to a charity can even help your mental health by improving your self-worth and inspiring gratitude. By rallying together around causes that make the world a better place, we can all benefit from being part of a community that helps each other.
— By Devin Gilreath, CFO, V Foundation for Cancer Research