How to make the most of your charitable contributions

Chapter 41: How to make the most of your charitable contributions

As people get older and have experienced the good things in life and bad, they’re more inclined to donate to causes they care about.

If you’re a “giver”, it’s important to avoid being taken in by charitable giving scams while also optimizing how much you donate to legitimate causes.

Let’s take a look at how you can do the most good with the money you have.

Avoiding scams

The growth of online, email, social media and mobile marketing makes it easier for bad operators to take advantage of generous, good-hearted people. These channels make it easy for phony charities to seem real.

Here are some things to look out for that could indicate a charitable giving pitch is fraudulent:

  • A group uses a name similar to a well-known and reputable organization.
  • A representative refuses to provide detailed information about the charity, including its mission, expenses, and detailed plan for how donations are used.
  • An organization won’t provide receipts or tax documents for your contribution.
  • A pitch for a new contribution begins with a thank you for a pledge or donation you don’t remember — or have no record of making.
  • A representative pressures you to donate immediately, so you don’t have time to do research.
  • A charity asks for cash donations only or requires that you wire
  • A representative offers to send a courier or overnight delivery service to pick up your money.
  • The group requires you to make a donation to be entered into a sweepstakes. (Legally, you never have to make a contribution to receive a sweepstakes entry.)
  • A charity is created immediately after an unfortunate event or natural disaster. Even if a group is legitimate and well-intentioned, it probably doesn’t have the infrastructure to get donations and help to the people who need it.

Here are some things you can do to make sure a group you’re giving money to is sound, stable and legitimate:

  • Ask for detailed information about the organization, including its official name, address, and telephone number.
  • Get the exact name of the group and do some research. Conduct a Google search using the name of the organization along with words like “complaint” or “scam.” If significant results come up, it’s a sure sign to stay away.
  • Call the organization and ask if they’re aware of a suspicious solicitation you’ve received. The organization’s development staff should be able to help with this. Even if a pitch is legitimate, they’ll appreciate knowing that it came across as bogus.
  • Similarly, if a request for money comes from a group claiming to help your local police, firefighters or other organization, call and ask the agency if they know about the group and find out if they’re receiving financial support from them.
  • Check out a charity’s reputation through the Better Business Bureau’s (BBB) Wise Giving Alliance, Charity Navigator, Charity Watch, or GuideStar.
  • Always get clear documentation of the percentage of your donation that will go to doing actual charitable work versus paying salaries and administrative expenses.
  • Don’t provide your credit or debit card number, bank account number or any personal information until you’ve thoroughly researched a charity.
  • Think twice about using texting to contribute cash. This is an easy way to make donations you have not completely vetted. Request that your mobile phone provider block premium text messages so you won’t be tempted to donate without thinking.

Do others a favor: If you’re ever the victim of a charity scam, file a complaint with the Federal Trade Commission. Your complaint will help others from being victimized.

Optimizing your donations

Here are smart things you can do to make sure your charitable donations do as much good as possible:

  • Start by creating an annual giving plan. Come up with a list of causes you care about and organizations you want to give to. Figure out how much money you can afford to give, set priorities and determine how you want to distribute the cash. Figure out whether you’ll make a bigger impact by giving smaller amounts of money to more groups or bigger gifts to fewer.

Tip: If you’re not sure how to go about making a giving plan, talk to your financial advisor or tax expert. They’ll provide the advice you need to set-up and implement smart giving strategies.

  • Keep a record of every donation you make, even small unplanned ones. You’ll be surprised how quickly little amounts of money add up.
  • Take time to explore the Internal Revenue Service (IRS) website to find out which organizations are eligible to receive tax deductible contributions.

Need to know: Tax exempt organizations aren’t required to pay taxes. Tax deductible means you can deduct your contribution to a group on your federal income tax return. This will reduce the amount you pay in taxes each year, allowing you to give some of the savings to charities.

  • Never send cash. For tax and security reasons, it’s best to donate to organizations using a check or by debit or credit card.
  • Get a receipt for every donation you make. (This includes cash and for items and supplies you give, as well.) You’ll need these if you’re ever questioned by tax authorities.

Remember: Giving money isn’t the only way to help. Volunteering your time can make a big impact, as well. If you use your time to bake, cook, create newsletters or other things, you can deduct the cost of ingredients and supplies from your taxes. You can also deduct mileage related to doing certain charitable activities.

Still looking for more ways to give?

Many good-hearted people decide to work part-time after they retire so they can earn more cash to give to the causes they care about. An easy way to do this is to work online or start an online business. It doesn’t cost a lot to open a business online and you choose when and how often you work. That provides greater flexibility for you to determine how much you want to make to give to the causes you care about.

What are you waiting for? Learn how you can earn to do good today!

 

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That Money in Your 401(k)?

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