Giving Smart – 7 Tips for Charitable Giving
Tis the season for giving – not only the gifts we give at Christmas, but also gifts to charity. For tax reasons, estate planning reasons, and philanthropic reasons, the end of the year is always a big time for charitable giving. Charitable giving can be a wonderful gift to the giver and the receiver. However, whether it is outright fraud or just bad management, giving can be perilous. Here are seven tips to help you give smarter.
1. Assess your values. You are approached by many organizations seeking your contribution, but you can only give so much. Make sure that you have assessed what you really value and seek out those organizations which will best advance that cause in a manner that is consistent with your values. Instead of being a burden, your giving is now aligned with your values. This will bring more meaning to your giving and more satisfaction.
2. Verify! Unfortunately there are a lot of sham organizations out there. Additionally, some charities that used to be tax exempt have lost that status as a result of recent changes in the law. Before giving, always verify the tax exempt status of the organization. If the charity does not have 501(c)(3) status, your gift will not be tax exempt. The IRS keeps a list of all organizations registered as charities at http://www.irs.gov/Charities-&-Non-Profits/Search-for-Charities
3. Do a little more research. Once you have verified that the organization is tax-exempt, do a little more research into the viability of the organization. Is it transparent? Who is in leadership? What are its results? Lack of transparency, poor leadership, or an underwhelming record of achievement are sure signs that your gift may be wasted. While it is good to understand how much of the charity’s funding is going to charitable endeavors as opposed to how much goes to administrative costs, don’t overemphasize this issue. A lack of investment in the organization may actually lead to poor performance.
4. Make sure you have the right charity. Some charities intentionally adopt a name very similar to another well-respected charity in an attempt to benefit from the good will of the other charity. Make sure you have thoroughly investigated the charity to determine it is in fact the charity you want to give to.
5. Be Clear. In your estate planning or other gifting documents, be clear as to where you would like the gift directed. If you would like the gift to go toward the new stadium, but you just give a general gift to the athletic department, it may end up being used for other things. Make sure you have spoken with the gift officer of the charity and explore how specific you can be in directing how the gift will be used.
6. Donate appreciated assets. Where it makes sense, donate appreciated assets. This can result in a double benefit. Not only do you receive a charitable deduction for the fair market value of the gift, but you also avoid paying capital gains tax on the sale.
7. Get a receipt. If audited you will need to establish that you actually made the gift. Make sure you get a receipt from the charity. Few things can be as rewarding as charitable giving. Few things can be as dispiriting as seeing your gift stolen or wasted. Follow these seven tips and be a smart giver.
This post is for informational purposes only and not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect to any particular issue or problem. Nothing herein creates an attorney-client relationship between Hallock & Hallock and the reader.