The holiday season is truly the season of giving. This is a great time to donate to a charitable organization! Charitable donations are a great way to reduce your tax burden while doing something for the greater good. If you are like most people, you are probably overwhelmed with the many choices available to support worthy causes – from cancer research to underprivileged children. Here are 8 tips to help guide you through the year end giving season and pick a great charity to support.
1. ALLOCATION OF RESOURCES THAT ALIGNS WITH MISSION
One of the first questions to ask when seeking charitable organizations to support is related to resource allocation. Does the organization dedicate staff and monetary resources towards its stated mission? To find out, research the organizations website and published reports, such as annual report and financials to see how the organization allocates staff time and resources to stated programs. Some online sources such as Charity Navigator are excellent resources. However, Charity Navigator only evaluates charities with annual revenue of at least $500,000. There are many excellent charities with operating budgets well less than this. At Global Surgical Expedition, over 85% of funds donated go directly to the equipment and resources needed to send mission teams to underserved countries.
2. LOW OVERHEAD
Another key area to evaluate in finding good charities to support is finding out if they have efficient operations and thus low overhead. Non-profits should be run as such – to raise enough funds to fully support the mission to the best of its ability while keeping overhead, such as salaries, advertising and other spending at a minimum. Look for organizations with 20% or lower overhead spending of their total budget.
As an example, Global Surgical Expedition used less than 15% of its donations to provide administration and fundraising costs. To keep overhead low, GSE used the help on many volunteers and board members provided personal support to cover additional administrative expenses so that you, as the donor, can know that the vast majority of your money is going directly to provide surgeries.
3. ABILITY TO REPORT SUCCESS
While this may seem like a no-brainer, you would be surprised how many non-profit organizations set out with a cause to support without an actual plan to achieve it or the ability to measure success. Good charities will report actual numbers of individuals served, in addition to other metrics to show evidence that their efforts are working towards their chosen goals.
For example, at Giving to Extremes, our primary goal is deliver surgeries and help build medical infrastructure within the countries we visit. In 2013, our annual Belize mission triaged 30 patients and provided 9 surgeries. We also brought over $10,000 worth of medical equipment to Belize to allow for treatment of bladder cancer not previously possible. We have successfully met our goal to more than double these numbers, triaging over 90 patients and providing 50 surgeries by growing our infrastructure and establishing two additional week-long trip throughout the year.
TIPS FOR DONATING
4. MAKE SURE THE CHARITY IS QUALIFIED
Only donations for qualified charitable organizations are tax-deductible. Online search engines such as the IRS Exempt Organization Select Check can help.
5. KEEP YOUR RECEIPTS
Donations must be accompanied by a receipt. Make sure the charity provides a written receipt with the amount and date of the donation. This does not need to be submitted with your tax return but should be kept to provide proof in case of audit.
6. DONATE PRIOR TO DECEMBER 31
To claim your deduction this year, the donation needs to be made by December 31. That said, if you charge the donation to your credit card by December 31, you can still claim your deduction even if the bill is not paid until next year.
7. THERE ARE LIMITS
There are limits to how much you can donate so make sure you consult with a CPA or review the IRS guidelines. This is particularly important if you are making very large donations.
In order to claim a deduction, you must itemize your deductions on your taxes using a Schedule A. Those who elect a standard deduction cannot claim charitable deductions.