Making a charitable donation of cash or property is quite simple. Be sure you select a charity that is a qualified tax-exempt organization. To find out, ask the charity or check its website. You can verify it using the IRS’s search tool, available online to the public.
After you have done your research and found the charitable organizations that meet your gift-giving goals, verified the charity’s tax exempt status, and selected the organization(s) you want to support, you can think about the best way to make your donation. Will you give cash or property, or both? Can you do anything to increase the amount of your gift without exceeding your budget?
Making Charitable Donations Has Never Been Easier
Whatever method you use to make your donations, make sure you keep good records of them. You will need these records to support your claim for tax deductions at tax reporting time.
Here are a number of the most popular methods for charitable giving:
Write a Check
The simplest way to donate is to write a check, or use your bank’s bill pay service to send a check from your account. Simply make a note in the memo line of your check that it is a charitable contribution. Record it in your own records to reference during tax time.
Employer Matching Programs
If your employer has a charitable giving matching program, consider taking advantage of it. These matching programs let you contribute more without putting a strain on your own finances. They frequently give you the option to make a lump sum contribution annually or deduct an amount you specify from each paycheck for the year.
Create a Donor Advised Fund (DAF)
Using a DAF allows you to claim a charitable tax deduction in the year of funding a DAF. Then you can make grants to the desired charity(ies) over one or more years. Through a DAF, for example, a married couple could donate $20,000 in year one, but spread the actual grants made to charities over a two-year period. Consult a tax specialist about how a DAF can be an important tax-saving vehicle for your donations.
Create a Private Foundation
A great way to make multiple contributions to charitable organizations is through your own private foundation. A private foundation is a nongovernmental, nonprofit organization usually funded by an individual, family or corporation. Private foundations are tax-exempt under the Internal Revenue Code. The purpose of a foundation is to support a variety of charitable activities, primarily through grant making. Wealthy people often use private foundations in their long term estate planning, but you do not have to be rich to create a foundation for your charitable giving purposes. The rules applicable to foundations require a set amount of charitable spending and distributions each year. You should consult a tax specialist about structuring a foundation for your charitable giving.
This form of online giving has grown in recent years with the advent of the internet. Online donations are usually lower or moderate amounts but the number of people giving is very large and growing. The popularity of online giving has led to the creation of some charities that accept donations exclusively online.
Organize an Online Fundraising Event
Create an online fundraising page for birthdays, holidays, or important life events. Direct your friends, family, and online contacts to the page where they can make a donation in lieu of traditional gift giving. You may be able to do it very easily using a new Facebook page. Advertise your event and your cause by posting a notice on Pinterest, also.
Raise the interest level among other potential donors by holding an online sale, auction, or a contest. You may be able to work with local businesses that may be willing to donate sale items or contest prizes to your fundraising effort. Your online sale can be in the nature of a yard sale, meaning that the items you sell are second-hand.
Note that whatever fundraising event you hold, make sure you comply with any applicable local laws. It goes without saying that you must make sure that you represent yourself and your event in a completely truthful manner.
Donations Directly From Your IRA
If you are older than 70½ and have a traditional IRA, you can transfer up to $100,000 per year tax free from it directly to the charity. This distribution can count as your required minimum distribution. The good news is these charitable distributions are not taxable if you follow the rules for a qualified charitable distribution (QCD). Discuss it with your IRA administrator to ensure you follow their procedures for tax free charitable distributions.
Donate Your Time and Gently Used Items
If you want to give but are short on cash, you can always give of yourself by volunteering to help out charities that need it. Most county governments have a list of non-profit organizations operating in the county that need volunteers. For example, Meals on Wheels is always looking for drivers to deliver meals to seniors and people with limited mobility. Your church is another place where you will always find ways to donate your time and second hand items.
Contact The Last Well For More Information
Making charitable donations has never been easier. For advice on which method works best for you and more information about how to donate to charity or any other topic regarding charitable giving, speak with the experts at The Last Well. We are a nonprofit organization registered with the IRS under U.S. Tax ID #26-4008579.