“Giving Tuesday” is an opportunity to assist charities deal with worthy causes
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As of early 2020, most of us have obviously turned our energies and attention to the global pandemic.
As we emerge from this dangerous time, it is important to remember that the past 20 months have had a profound impact on charity giving. It has been widely reported that small charities across the country have suffered significant donor losses as donors were scaled back during the Covid-19 health and economic crisis.
However, the urgent need to address issues such as climate change, homelessness, heart disease and cancer has not diminished. As we look forward to a brighter future, we must unite to support causes that benefit humanity.
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Giving Tuesday, which has given a huge boost to nonprofits since it launched in 2012, is a global charity day that takes place on the Tuesday after Thanksgiving (November 30th this year). With Giving Tuesday you have the opportunity to do something for the things that are important to us all.
If you are in the fortunate position of having a charitable gift this holiday season, you want to make sure that your contribution has the greatest impact.
How do you choose a charity so that your donation will have the most impact?
- Plan ahead and research causes that are important to you. Use a nonprofit evaluator like Charity Navigator, the largest charity evaluator in the United States. Look for organizations with the highest rating of four stars. Also consider charities with consecutive four-star ratings, as this means the organization has consistently met criteria for transparency and tax responsibility.
- Look for nonprofits that can help you get the most bang for your buck. See how much of your donation actually goes to the mission you want to support. For example, if you donate $ 100 to cancer research, will 100% of your contribution go to the Mission or is that percentage significantly less? Best-in-class organizations carefully manage operating expenses to ensure that the vast majority of donor funds are used for local impact. Both Charity Navigator and GuideStar, another of the larger charity reviewers, often provide this information when it is not readily available on the organization’s website.
- Look at the scaling. Some charities can maximize their impact by pooling resources. For example, if you donate money to a blackboard, more people can benefit from nutritious meals by using economies of scale when purchasing groceries in bulk. Think about what you want to achieve with your contributions locally, nationally or globally – and which organizations are best positioned for it.
- Remember that the biggest or best-advertised charities are not always the best in their class, so do your homework.
What about the tax implications?
- This year is a great year to give. In 2021, individuals who fail to list their deductions will receive a $ 300 deduction for cash contributions to qualified charities; Couples, meanwhile, will receive a $ 600 deduction. Previously, the withholding was capped at $ 300 per tax return – which means a couple who can file together can double their withholding for 2021. Since this is an over-the-line deduction, this amount will reduce your adjusted gross income, which may qualify you for additional tax breaks. Donations must be made by December 31st to receive the tax credit.
- Remember, financial decisions you make by December 31st can have a significant impact on the taxes you owe.
- Taxpayers who are 70½ years of age or older can send up to $ 100,000 tax-free each year from a traditional individual retirement account to a charity as long as they send the money directly to the charity. This will count towards your cancellation of the minimum required payout and will reduce the size of your IRA, reducing both future withdrawals required and your tax bill.
- Individuals over the age of 59½ (to avoid early repayment penalties) who deduct retirement accounts in 2021 can use deductions from their charitable donations to offset income tax liability on the withdrawals.
How to choose a reputable charity
Here’s a handy checklist for choosing a reputable charity:
- Make sure the organization’s mission is clearly stated.
- Make sure the organization is making progress in fulfilling its mission. Look at the percentage of donations used for overhead versus mission.
- Review the organization’s 990 financial statements or audited financial statements to ensure that sound financial practices are being applied.
- Take a look at the organization’s leadership, board of directors, advisory board, and other governing bodies to see the makeup of the people who make important decisions for the organization.
With your support, your favorite organizations not only help your community, but also make a positive contribution to humanity as a whole by helping to alleviate problems such as poverty, the climate crisis, access to education or disease.
Donating to a charity can even help your mental health by increasing your self-esteem and creating gratitude. By getting involved in things that make the world a better place, we can all benefit from being part of a community that helps one another.
– By Devin Gilreath, CFO, V Foundation for Cancer Research