According to the famous British Statesman and Prime Minister Sir Winston Churchill, “We make a living by what we get, but we make a life by what we give.”
Churchill’s quote is supported by statistics: most years, more than 80% of Americans donate to charities. From cash and endowments to participating as a walker or runner for a cause to donating food, clothing, even blood — these charitable contributions take many shapes and sizes.
Giving time, money, or items can go a long way to help others. But careful consideration of when, how, and what you gift should play a part in your financial planning. That’s because, although you can save on your taxes when you make qualified charitable contributions, you could save even more depending on how you file. You’ll want to do your due diligence by talking with your accountant and a wealth advisor like Stonecrop. But knowing the answers to the following three questions now can help develop your plan faster when you meet.
3 Questions Answered for Successful Charitable Giving
There are many organizations that will put your gifts to good use, supporting missions that are important to you. You will want to find 501(c)(3) organizations named for the tax code section they are covered under. 501(c)(3) organizations are charitable organizations that are eligible to receive your tax-deductible contributions. Or, in other words, you can make tax-deductible contributions to them.
1. Who do you want to give to and why?
Who you want to give to is an important question. But why you want to give is perhaps an even better question. With approximately 1.54 million charities registered with the IRS in the U.S., there is an overwhelming variety available to receive your help.
Categories and causes you may be interested in include:
- Animals: zoos, conservation, rights
- Arts, culture, humanities: libraries, museums, performing arts
- Communities: housing and neighborhood development
- Education: early childhood, special needs
- Environment: conservation, pollution abatement
- Health: diseases, patient support
- Human rights: advocacy, global impact
- Religion: activities, missions
- And more
Looking for charities with A ratings because they give at least 75% of their funds to their programs can give you a good starting point globally or nationally. You may also be more comfortable looking for places in need close to home or for ones that are supported by friends or family. Some people like to get involved through work because many companies support some type of non-profit. Stonecrop, for instance, provides global support through Edify.org, and Hope International, and local giving with Sunday Breakfast Mission.
Find more organizations at Charity Navigator.org or Charity Watch. And, even more importantly, you can use these two sites to check an organization’s reputation (good and bad), too. Additionally, check an organization’s website for financial information. It should be readily apparent and easily obtainable.
2. What can you afford to give and what does it mean to your taxes?
You don’t have to give a lot to make an impact. But, when you consider that your donations can be deducted from your tax return, giving more not only helps more, it could be more affordable to do than you realize. This year, you can give up to $300 of cash donations to charity ($600 if married filing jointly) as a standard deduction and get its tax-saving benefits. Remember, it’s removing that sum off of your tax bill — a win-win for both of you because you each get something for your donation.
However, if you choose to itemize deductions, you can contribute even more (cash and non-cash items such as clothing, food, furniture, property, and cars). While the details are more intricate and should be handled by a tax professional, new tax laws let you contribute up to 60% of your adjusted gross income when you itemize.
Whichever route you go, always make sure you receive documentation about your gift from the organization. More substantial or intricate donations require you to talk to your accountant or financial advisor to determine that you are making and getting the best financial impact for your gift. This will also help ensure that it’s documented correctly. You’ll want to have these conversations in time for your donations to be in place at the end of the calendar year to be counted toward lowering this year’s tax burden.
3. What resources to use?
You should plan to talk to your accountant and your financial advisor if you’re thinking about making larger donations. Perhaps you’re at a point in your life where you want to give back to someone who helped you. You agree with Winston Churchill, who also said, “The price of greatness is a responsibility.” An endowment toward a school or program might be the way to go. Or you want to make a gift of property or stocks to an organization that is researching cures for a deadly disease. These types of gifts need careful planning and structuring to make sure that both sides get the benefit of the intended gift.
At Stonecrop, we not only work with individuals who are passionate about helping their families and community benefit from their success, but we work with a lot of non-profit institutions to help ensure their investments support their goals. We are uniquely qualified to see both sides.
One of our favorite things to do is to help our clients align their mission and goals with their resources, clearing the path to make it happen. If you would like to find out more about Stonecrop and how our financial planning services can help you with your investments and charitable giving opportunities, please don’t hesitate to connect with us here. We look forward to speaking with you soon.