4 Your Money: Smart tips on charitable giving
OKLAHOMA CITY – This is the season of good will to all, a time when people take time to think of others. In addition to giving gifts and planning holiday get-togethers, many people are also dipping into their pockets to make donations to worthy charities. While that’s a good impulse, it’s important to do your charitable giving wisely. The Oklahoma Society of Certified Public Accountants (OSCPA) provides this advice on ways to make your money the most productive.
Know your goals. When confronted with an urgent call for help from a charitable organization, think first about what other causes are important to you. In fact, before you begin receiving end-of-year appeals, it may be a good idea to decide exactly how much money you have to give to charity, then brainstorm ideas about the causes you care about most. You can’t say yes to every worthy effort, and creating this kind of charity budget will help you focus on the best choices for your donations.
Be specific. Let’s say you’ve decided you’re interested in charities that help homeless dogs and cats. Before you make your donation, consider whether you have more specific goals in mind. Do you want to give your money to feed or provide medical care for animals in shelters in certain areas? Do you want to support spaying and neutering programs? Do you want your money to be used to support adoption efforts? Determine what your goals are and focus on organizations that have a history of achieving them.
Don’t give to an unknown cause. Even if a group supports the right cause, there are a number of questions you should ask before you donate your hard-earned dollars to it: How much do I know about this group? Am I confident that it is a legitimate organization that will use my money to benefit the cause it’s espousing? Am I sure that the group will not sell my name and contact information to telemarketers? For more information, look over the organization’s financial statements and consider turning to sources such as Charity Navigator (www.charitynavigator.org), which provides free ratings on a wide variety of charities. Some donors are disappointed to find out how their money is used, with a large amount going to administrative and other expenses rather than to support the cause. Of course, all charitable organizations will have to cover administrative costs to keep operating and pay salaries that attract talented people who can help them achieve their missions. CharityWatch (www.charitywatch.org), which also rates charitable organization, recommends that 60 percent of a donation should go to program services, with the rest spent on fundraising and general administration. Keep in mind, though, that the numbers don’t always tell the full story. If you have a question about how a group spends its money or how well it meets its goals, don’t hesitate to contact them and ask for some perspective.
Understand what’s tax deductible. Did you spend $200 to attend a charity dinner? If the value of the dinner you received was $75, then you can only deduct $125 for your donation. You must subtract the value of any benefit you receive from a donation before deducting it on your tax return. Remember, too, that no donation is deductible unless you itemize your deductions on your tax return and unless you give to a qualified organization in the eyes of the Internal Revenue Service. IRS Publication 526 (http://www.irs.gov/publications/p526/index.html), Charitable Contributions, offers more details.
Have more questions about the best ways to spend your money? Your local CPA can offer the advice you need. Turn to him or her for with all your financial questions. For more money tips, visit www.KnowWhatCounts.org, where you can sign up for a free e-newsletter, get a free CPA referral and more.