If You Give, You Will Get…More Mail!
We are entering the season of charitable giving. From the looks of your mailbox, however, that season lasts all year long. No matter what you do, most charities will send you a solicitation every 6 to 8 weeks making the whole charitable giving process overwhelming. In our Whole Life List, October is the month we take care of giving - both organizing the process as well as making the contributions.
Here are some tips for staying in control of your charitable giving:
1. Decide which charities to give to. Develop a list of your top 5-20 charities and give only to those. Make an actual list and keep it near where you sort your incoming mail. If mail comes from a charity not on your list, throw it away. Don’t open and read it. Those letters will tug at your heartstrings. Just throw it away.
2. Pay attention to the name of the charity. Most charities will generate income by selling their mailing lists to other charities that deal with a similar issue. For example, if you give to the World Wildlife Fund, you may also receive solicitations from other wild animal protection charities with names like “World Wildlife Protection”, “Save Wildlife”, etc. Pay attention to the name of the charity and make sure that it is the one you intend to give to.
3. Give to each charity once a year. It saves an organization money when they don’t have to process multiple small donations from the same donor. For example, give $250 instead of five $50 donations throughout the year. Save one request envelope from each charity each year and throw out the rest. It doesn’t matter which request you keep. The charity will happily receive your money even if you send it in an envelope that is 6 months old. When you are sorting your mail, if mail comes from a charity you already gave to this year, throw it away.
4. Start early. From a bookkeeping perspective, it is good to have all donations clear the bank before the end of the year. Then there is no question regarding which tax year had the deductible expense. Charities often prefer to receive money in seasons other than the holiday season. At Everyday Money Management, we start the donation process with our clients in October.
5. Only give to reputable charities. There are many scam charities out there just waiting to exploit donors. Consult a charity rating service such as Charity Navigator, Charity Watch or GiveWell to make sure your donation goes to a reputable organization that will use your money well.
6. Check the tax status of the organization. Make sure the organization has the proper status with the IRS, usually 501(c)(3), which allows your donation to be deductible. In this election year, you may have donated to PACs or political parties. When you are preparing your taxes, keep in mind that donations to political organizations are not tax deductible.
7. Keep documentation for tax purposes. For donations over $250, an acknowledgement letter from the charity is needed to support a tax deduction. Most charities send a thank you letter even for smaller donations. Keep those with your tax backup documentation.
8. Stay in control of recurring donations. Some of us like the idea of charging our donations monthly using a credit card. It allows us to spread our donation across many months and may give us rewards through the credit card company. There is nothing wrong with this method but it is important to verify automatic monthly donations on bank and credit card statements to make sure they are consistent with your agreement with each charitable organization.
9. Consult your tax preparer. 2019 tax law changed with regard to personal exemptions and reduced the likelihood that some taxpayers will itemize deductions (which is where charitable donations provide a tax break). Donating non cash assets such as stocks, ETFs and mutual funds that you have held for more than a year may offer an additional tax benefit. A consultation with your tax preparer can help you plan appropriately.
Everyday Money Management can help you get control of your charitable giving by implementing these in your home. Contact us for a free consultation at 301-801-2294, office@everydaymm.com or on our website contact page.