Guidelines for Charitable Giving‏

Written by: Martin X. Shields

At the end of the year many individuals and families finalize their charitable giving for the year.  In many cases this can be a sizable amount of money relative to their income and net worth so it is very important that some guideline are followed to make sure the dollars are donated wisely.

• Before you make a donation, make sure you have done your research on the organization. Check if the charity is trustworthy by contacting the Better Business’s Bureau (BBB) Wise Giving Alliance, Charity Navigator or Guidestar.  Understand how much of the charity’s budget is used for fundraising and administration and how much is used to support the mission of the charity.

• Determine the most tax efficient manner to donate to charity.  One of the best options is to donate highly appreciated investments.  This will allow you to receive a tax deduction for the full amount of the donation without paying any capital gains on the appreciated portion of the asset.

• If you can’t make a final decision on which charity to donate to before the end of the year but know you want to make a charitable contribution for the year, you can contribute to a donor advised fund.  This will allow you to receive a tax deduction for the year and delay your decision on which charity to support until next year.

• For your records and security purposes, it is best to donate using a check or credit card.  Limit any donations made in cash.  For charities that you give to annually, it may be beneficial from a budgeting perspective to establish a monthly contributions from your credit card or bank account rather than making larger gifts at the end of the year.

• This may also be a good time to develop a long-term charitable plan for your family.  This plan may including finding charities to support that would engage your children’s interests, finding charities where you can volunteer your time and including charitable interests in your estate planning.

• If you want your gift to be used by the charity in a specific manner or on a specific project, make sure written guidance is provided to the charity and have a conversation with a senior manager for the charity to review your requirements.