The holidays are, naturally, a time of giving — a time when people look to show gratitude for and to others by giving gifts or donating their money or time. It’s often when individuals look to donate funds to their favorite charities or special causes that are important to them. But is it as simple as writing a check?
Unfortunately, it may not always be that easy, as scammers can be especially active during this season, looking to take advantage of those with the best intentions. Further, there may be certain tax benefits or strategies you may not have considered that can maximize your giving efforts.
Below, eight financial leaders from Kiplinger Advisor Collective share their insights on charitable giving during the holiday season as well as the best tips you should know to ensure you’re doing it the right way.
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Ensure your chosen charities are legitimate
“I think it’s always important to use caution and to research any of the charities you’re considering giving to. Make sure they are legitimate — because the holiday season is also a time where more fraud happens, unfortunately. By being cautious with your finances and doing your research, you can ensure that 100% of your donation is going to the cause you support.” — Justin Donald, Lifestyle Investor
Consider donating locally
“Look into your local charities first. There are often many smaller charities in your hometown or state that need your help. Places like local animal shelters, food banks, homeless shelters, soup kitchens and so many more are all great examples of local causes you could consider donating to. Donating locally is key to ensuring you have a direct impact in your community.” — Angela Ruth, Due
Set a charitable giving budget
“When thinking about charitable giving during the holiday season, you should decide in advance how much you will give. The holidays are a busy season, and it’s very easy to overspend. It’s important to have an understanding of all your anticipated expenses for holiday parties, decorations, gifts, travel, food and other activities as you also determine what you have available for giving. Once you have your charitable giving budget set, you can decide whether you want to give that amount to one cause or organization or split it among a few different ones.” — Chianté Jones, Dollars and Change
Plan to do well while doing good
“Charitable giving presents a wonderful opportunity to strike a balance between doing good and doing well, especially in terms of annual tax planning and estate strategy. To engage in charitable giving effectively, it is crucial to start by identifying your passions and then utilizing tools like Charity Navigator to assist in selecting IRS-compliant organizations. Additionally, discussing your short- and long-term giving strategy with your accountant will ensure that you maximize the impact of your generosity. Lastly, don't forget to inquire about donation matching programs offered by your employer.” — Ramona Ortega, My Money My Future
Kiplinger Advisor Collective is the premier criteria-based professional organization for personal finance advisors, managers, and executives. Learn more >
Make sure you have a paper trail
“When donating, make sure you are choosing a reputable organization, as there is an increasing number of scams that arise every day. For tax purposes, make sure you have a paper trail of your charitable donation so that you can take the valuable deduction. This includes ensuring that the donee is properly established as a charity in the eyes of the IRS.” — Andrew Schrage, Money Crashers LLC
Find charities with documented results related to your goals
“Be strategic in your charitable giving by determining your most important charitable goals and then find charities that have documented results in those areas with an efficient use of their working capital. For instance, what percentage of their spend goes to marketing vs their mission? These readily available disclosures are key to making sure that your charitable dollars are going to where they will do the most good.” — Bill Hortz, Institute for Innovation Development
Take advantage of a qualified charitable distribution
“Retirees over 70½ years old should be aware that they can direct some or all of their annual required minimum distribution (RMD) to a 501(c)(3). This type of distribution, known as a qualified charitable distribution (QCD), is a huge tax win as the donor can send the distribution directly to charity and avoid recognizing taxable income.” — Dennis McNamara, wHealth Advisors
Leverage any corporate matching
“Don't forget to take advantage of corporate matching. For example, my gift of $333.33 was doubled twice. My employer doubled my gift because I volunteered more than 20 hours in the year. As a young alumna, I was able to maximize my charitable contribution and support my alma mater. Of course, taking advantage of donating appreciated securities and donor-advised funds is super helpful, too.” — Marguerita Cheng, Blue Ocean Global Wealth
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The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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