After weeks of being pounded with ads telling you to BUY BUY BUY, today you get a small break for Giving Tuesday. It’s a day for the nonprofits of the world to raise their hands a little higher, and ask you for help.
Giving to charity isn’t just for the wealthy – in fact it’s the smaller amounts donated by the general population that make up the majority of revenue for many nonprofit organizations.
So, what does this mean to you?
Giving, where you can, should be a part your financial life. And like the strategies you build for earning, spending, saving & growing your money – having a strategy for giving will make your whole financial life more rewarding.
If you haven’t got a plan in place – today is a great day to consider one.
The first thing to do is figure out what issues are important to you. Focus on a few nonprofits in those areas and then do some research. Just like looking at the fundamentals of a company to determine whether it’s worth investing, look at these fundamentals of a nonprofit organization:
- What % of donations go directly to programs
- How much of every dollar raised is used to pay for fundraising
You can use sites like Charitywatch or CharityNavigator to find great data on charities. You’ll see, for example, that Donors Choose is a super-efficient charity. They are great at fundraising (they only spend $5 to raise $100 in donations) and they are fantastic at directing donations into programs (93% of money raised goes to programs).
You could also think about setting up ongoing payments, or linking up your credit cards to benefit the charities of your choice. Or for those among us who use Amazon as our default retailer – go to smile.amazon.com and get 0.5% of your purchases donated to a nonprofit of your choice.
Also consider the idea of using your own data as a starting point. Subscribe2Change has created a very interesting way to correlate your purchase behavior with charitable giving.
Also remember that donations to charities can be used as a tax deduction. This is a way to lower your taxable income, thereby lowering the amount of tax you need to pay. But remember these qualifications:
- Your charity must have 501(c)(3) status with the IRS to allow for tax deductions.
- If you get something with your donation (like from a charity auction) you have to subtract the value of that item from the amount you claim.
- You have to submit an itemized tax return to get the deduction.
- The deduction is not worth claiming until all of your deductions exceed the standard deduction (in most cases it is $6,300 for individuals or $12,600 for married couples filing jointly).
Whatever strategy you choose, remember that the more you grow your money – the more you can give over time. And in the meanwhile – we can all aspire to be like Oseola McCarty, who donated $150,000 to the University of Southern Mississippi, even though she only had a sixth grade education and worked as a washerwoman. She was a great role model for making donations a part of your life.
Make it count.