Improve Your Giving With 5 Smart Charity Tricks

Year's end is fast approaching, and now's a good time to pull out your wallet and make a charitable donation. Deductions, baby! Of course, donating to charity isn't just about the tax advantages; your contribution can make a difference in someone's life. Nonprofits will accept donations of any size, so there's no excuse to hold back your generosity. Still, there are ways to make the most out of being charitable. Take a look.

1. Select an Organization You're Passionate About

You can give to any cause, whether it's one that helps women, children, churches, hospitals, or veterans. Some people choose a random organization to support, which is perfectly okay. But to make the most out of being charitable, choose a cause that means something to you.

Maybe you have a relative or friend who is visually impaired. If so, you could make a donation to the American Foundation for the Blind or a similar organization. Or if you've been affected by childhood cancer, a donation to St. Jude might be up your alley.

Whatever organization you choose, make sure it's reputable to avoid scam artists. It's unfortunate, but some people will take advantage of your generosity. In 2015, the Federal Trade Commission busted and charged four fake cancer charities for scamming more than $187 million from generous donors. Do your research and learn about organizations before you give a dime. Sites like Charity Navigator and Givewell will help you evaluate.

2. Ask About the Charity's Needs

Although your favorite charities may accept any donation you give, you can make the most out of being charitable by contacting individual charities to see if they have any specific needs.

Just about every charity can benefit from a cash donation. If you don't have the resources to write a check, you can donate old items cluttering your house. But depending on the item, the charity could already have a stockpile in their inventory and a shortage of other items. If you know what an organization needs, you increase the likelihood of your donation being put to good use.

3. Put Donations on Autopilot

Even if you have every intention of making regular charitable donations, it's easy to get busy and forget. Fortunately, there's a simple way to be charitable — put your donations on autopilot.

Many organizations allow givers to set up automatic or recurring monthly donations. Give your favorite charity a call to see if this is an option, and then ask for details on setting up your account. Some credit cards also have online portals that allow cardholders to donate to a chosen charity using their credit cards, plus the option of donating their rewards points and cash back rewards to charity. You can also apply for a credit card that partners with an organization that gives back for your purchases.

4. Save Receipts for Tax Purposes

One benefit of being charitable is the opportunity to write off donations on your tax return and reduce your tax obligation. This can result in a lower tax bill or a bigger refund.

There are a number of ways to save with charitable donations, so talk to your tax preparer to see how you can get the most bang for your generosity. For example, you can donate appreciated stock that you've held for at least a year to avoid long-term capital gains tax. You'll also get a tax deduction, which turns your good deed into a win-win situation.

If you don't own stock and want to donate cash, keep in mind that any amount $250 or more requires proof of the donation, either with a bank statement or a receipt from the organization. If you're giving a non-cash donation (clothing, gifts, household items, etc.), contributions greater than $500 requires filling out IRS Form 8283 and attaching the form to your tax return. If your donation is greater than $5,000, you'll need a qualified appraisal to benefit from the donation.

5. Make Sure the Organization Qualifies for a Deduction

Just because an organization accepts donations doesn't mean it's an IRS qualified charity. If you itemize your tax return and deduct charitable contributions, you can write off deductions up to 20% to 50% of your adjusted gross income. Larger donations can lower your taxable income significantly, but you'll only reduce your tax liability if your money goes to the right organizations.

The IRS explains the rules for determining whether a cause is a qualifying organization for a tax deduction. Qualified organizations include those that support religious groups, war veterans, non-profits, volunteer firemen, civil defense organizations, foundations. etc. If you're unsure whether a particular organization qualifies, contact the IRS.

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Joanne Mahoney

Good article. Instead of gifts to people that have "everything," we often donate to our loved one's favorite charity. This gift is always appreciated.