Year End Tips: Making Charitable Deductions

American’s donated an estimated $250 billion to charity last year, primarily through individual contributions. About half of that money was donated in the weeks between Thanksgiving and Christmas. But this year, donors are feeling the pinch. Local charities in particular may be left out in the cold. This week, how to get the most bang for your buck in regards to charitable deductions. First, consider the cause. Don’t just give blindly. Take the time to consider which causes you feel most strongly about. That way, you’ll get the most satisfaction out of your giving. That extra bit of thought can also help you pick the right charity out of dozens that support a broader goal.

If you plan to dig a little deeper this year to give to charity, my advice today is do some research. Start by visiting the web sites of charities you’re considering. Look for details about the charity’s goals, the programs they sponsor, and how they spend their money. Next, review the charity’s finances. Ideally, a charity should spend 75% or more of its donations on programs — as opposed to supporting the charity itself. Charity Navigator offers a list of the most and least effective nonprofits in several categories, from animal rights to youth development.  Check them out online at www.charitynavigator.org.

Remember, you can give more than just money. Used clothes, books and other items can be a welcome donation to many charities — and can still qualify for a tax donation. If you go the non-cash route, just be sure to call the charity first to make sure they want what you’re offering. Another option is to volunteer your time. Many charities need assistance in their offices, with solicitations and of course, on the front lines. You never know where your particular skills or knowledge may be of use.

If you itemize your taxes you should be able to get a nice tax deduction on your contribution. Just make sure to follow all the rules for qualification. First and foremost, you need to give to an IRS-approved charity. You should also be familiar with what sort of paperwork is needed for your tax return a receipt recognizing your contribution and so on, which will vary based on the size of the donation. But this year, donors are feeling the pinch. Local charities in particular may be left out in the cold. So if you can,—dig a little deeper this holiday season.