Understanding the Impact of Your Charitable Donations

The time of year when the donation requests start rolling from charitable organizations in has come again. In fact, December is when 30% of annual giving occurs, and 10% is done in the last three days of the year. The holiday spirit gives us a wonderful incentive to gift your money, time or resources, but before you do, be sure to carefully look at the organization and its policies to make sure your donation is sent to the right place.

According to Consumer Reports, the major charity watchdogs such as BBB Wise Giving Alliance, Charity Navigator, and CharityWatch are all helpful tools to research a charity. These websites provide a toolbar for you to type in the charity’s name along with a tab explaining their rating methodologies. You work hard for your money and your time should be well-spent, so you want to be sure your donation will actually make a difference.

If the organization you are researching has not been evaluated by a charity watchdog, then, check out the charity’s website. There you should find detailed information such as their mission statement, how donations are used, how much of your donation will directly impact the area you support, a listing for the board of directors, and up-to-date financial reports. A website lacking details and transparency should quickly throw up a red flag.

Once you are confident in donating to a charity, you can give in multiple ways. If you are considering a gifting strategy and are a taxpayer planning to utilize the standard deduction instead of itemizing, consider grouping your charitable contributions into alternating years. This strategy can sometimes allow you to take the standard deduction one year, and itemize an amount that exceeds the standard deduction the next year (or two years). If you do not want to give the money or appreciated investments to charity all at once, consider contributing directly to a donor-advised fund and gift the distributions to charity or multiple charities over time. Grouping multiple-year charitable contributions together in one year, rather than contributing annually, may help you exceed the standard deduction hurdle, thereby receiving a more significant tax benefit for your charitable giving. Charitable donations are fully controllable so be sure to talk to your CPA, advisor, or contact me if you would like to further explore your options.

Giving your time, money, and resources is a gift, and some charitable organizations are better than others in best utilizing your gifts. There are hundreds of deserving charities, so please donate in any way possible to help improve the lives of others. In fact, find a way to give back throughout 2020 and the upcoming years. In the words of Anne Frank, “No one has ever become poor by giving.”

In addition, JP Williams is the Founder of Pillar Wealth Group who lives and works near Columbus, Ohio. JP founded Pillar Wealth Group with over 17 years of experience and specializes in financial planning, retirement planning, investment management, risk management, college planning, and estate planning. Contact us today to get started with your financial wellness journey. Contact us today to schedule an introductory meeting!