Smart Charitable Giving Tips for the Holidays
Use Your Heart and Your Head
At this time of year, we are all swamped with letters, phone calls, and emails from charities. It's natural.
After all, people are likely to be at their most generous during the holidays. Not to mention that philanthropic gifts need to be clocked in by December 31st to receive a tax deduction.
It's no wonder that, traditionally, charities have received the bulk of their yearly donations during the last couple of months of the year.
It's a great time to give. But it's also essential to make sure that you donate your hard-earned dollars well. That takes more than a generous heart. It also takes the rational thought of a hard-nosed consumer who can pick the best choices from a myriad of opportunities.
Unfortunately, many donors don't put that much thought into where their donations go. When they do research charities, people often focus on the wrong data.
The Better Business Bureau's Wise Giving Alliance found as recently as 2014 that only eleven percent of donors considered a charity's results when deciding to donate. Finances and ethics were examined much more often . Today, charities offer so much more information about results, and that is good. Make sure that your choice of charities provides information about how well they accomplish what they set out to do.
Here are four tips to help you become a smarter donor by making sure that your charitable contribution goes where it is sure to do the best:
Use the Charitable Consumer Reports
- GuideStar lists more than a million nonprofits in its database, all of which have met IRS criteria for exempt organizations. You can check here to make sure your charity is a 501(c)(3), and examine its latest tax form, called a 990.
- The Better Business Bureau's Start With Trust website keeps track of complaints against nonprofits, just as it does for businesses. A nonprofit that displays the BBB logo on its site has passed a rigorous screening process from the BBB. However, not all nonprofits are listed here, but many large, national ones are.
- Charity Navigator ranks charities based on their efficiency, transparency, and accountability. The rating agency gives charities up to four stars, providing an easy way to find the organizations where your contributions will be safe and effective. You probably will not see your local or most smaller nonprofits at this site. CharityNavigator doesn't rate all charities.
- Great Nonprofits provides user reviews of nonprofits, which can give you a more personal view of what real people, who either donate or receive services, think about a particular nonprofit. These reviews are based on people's perceptions, not on hard data about effectiveness. So use them to assist your charitable choices, but not determine them.
- Givewell has the scoop on charities that do the best work on issues such as health and poverty on a global scale. This organization studies charities in this sector for the most effective ones. In other words, if you want to make sure your money is doing the most good, check out GiveWell's recommendations. There are only a few recommended charities on GiveWell's list, but in the murky world of global philanthropy, picking one of these trusted groups could be one of your best choices.
- The Life You Can Save was founded by Peter Singer, a sometimes controversial figure in the philosophy of philanthropy. The Life You Can Save website encourages people to give to organizations fighting extreme poverty around the world. Singer believes that every dollar should count and recommends only those charities that do the most good for every dollar spent.
Go Local and Don't Micromanage
A good rule of thumb is to start locally for your charitable giving. You will help your community, and you can know those organizations in a way you can't with national and international ones. Local nonprofits also help employ your neighbors and friends. After you pick a couple of local nonprofits, then think about going further afield.
Don't put strings on your gifts once you decide on a nonprofit that you like and trust. Be generous enough to give an unrestricted donation. Unrestricted means that the nonprofit can use the money where needed. Unrestricted contributions provide organizations the flexibility to meet any of their needs.
Show your trust in your charities even more by giving recurring gifts. You can set up a monthly donation with your credit card or through your bank. Recurring income can mean financial stability for a charity. And you won't have to remember to give frequently. It will be automatic.
Add to Your Emergency Giving
If you gave earlier in the year to an organization that helped in a disaster (think of the Ebola crisis, hurricanes, and earthquakes), go back to that organization and give more.
Much of the need from any disaster comes later, during the recovery period. Your continued support will mean so much to that nonprofit and the people it helps.
Also, give money instead of goods. Things like clothing or household supplies all have to be sorted and shipped, entailing many hours that could be spent in better ways. And with money, an organization can buy what they need closer to the emergency site.
Don't Become a Social Dummy
In a world of Facebook, Twitter, Instagram, and YouTube, it is easy to get carried away with the fundraising appeals coming your way. But stop and do your research before giving.
Check out each charity using one of the services listed above and make sure you know who is behind the appeal. If in doubt, say no. It's also much better to give more to a few worthwhile charities than small amounts to many. Make your donation count by bulking it up.
There is no doubt that giving makes us feel good. So go ahead, be generous this holiday season. If you do so with both your head and your heart, your giving will warm you and others for a long time to come.
BBB Wise Giving Alliance, "Americans Misinformed Before Donating to Charities," Oct 28, 2014. Accessed Nov 22, 2019.