As we approach the end of 2023, many are considering charitable donations. It’s the festive season, a time not just for gifts and celebrations but also for giving back. Despite tight budgets due to inflation, opportunities to contribute remain abundant. Numerous charities are feeling the strain as disposable income decreases. Data from Giving USA shows that 2022 saw a decline in charitable donations, marking only the fourth occurrence in 40 years. While donations surged on “Giving Tuesday,” the number of donors dropped by about 10% compared to 2022. Thus, fewer Americans are stepping up to give, even though many still contribute generously.
Explore Your Donation Options
Historically, donating through checks, credit cards, or cash was the norm. However, today’s donors have a variety of innovative methods at their fingertips.
“Modern donors not only possess diverse assets but also many effective ways to donate,” states Alexis Miller, Donor Engagement and Strategic Partnerships Lead at Endaoment. “Especially for those with appreciated assets like stocks or cryptocurrencies, donating them directly can be beneficial.”
But how can you begin donating assets like stocks or crypto? Numerous charitable organizations can directly accept these donations, or you can opt for a third-party platform like Endaoment, which converts these assets to cash for charities and provides compliant tax receipts to donors. “By donating the original asset, donors can potentially sidestep capital gains tax and deduct the fair market value,” Miller adds.
Another method is through a donor-advised fund (DAF), which allows for streamlined charitable giving. “DAFs not only offer immediate tax benefits but also enable growth of charitable assets, allowing for grants over time to desired nonprofits,” Miller explains.
For those considering non-cash donations, it’s crucial to evaluate your options. “Donors should aim to give highly appreciated assets held for over a year for optimal tax advantages,” Miller advises. If this sounds overwhelming, consulting a financial professional can ensure effective donation strategies.
Do Your Research Before Donating
Data from the FBI reveals that Americans lose millions to charity scams each year. Avoiding these pitfalls starts with thorough research on the charities you wish to support.
“Research any charity rigorously before donating,” advises Kevin Scally, Chief Relationship Officer at Charity Navigator. “Confirm it is a valid 501(c)(3) nonprofit to ensure your donation is tax-deductible.”
All nonprofit organizations possess an Employee Identification Number (EIN), which helps donors identify them through the IRS’s Tax Exempt Organization Search. Additionally, explore the charity’s online presence for details about their mission and programs. Review their profile on Charity Navigator or similar sites like the Better Business Bureau’s Wise Giving Alliance, Charity Watch, or Guidestar.
Be Aware of Scams
Experts indicate 2023 has seen a rise in “copycat charities.” “These scams exploit individuals looking to give during the holidays,” Scally explains. “Scammers often create names similar to legitimate charities to mislead donors.”
If you receive unsolicited calls soliciting donations, approach with caution. If pressured, it’s best to hang up. Never provide personal information or credit card details unless you’ve initiated the call to a verified number. Requests for cash donations or wire transfers should raise immediate concerns. In such cases, confirm the charity’s legitimacy through their official website. Be wary of suspicious emails asking for donations; it’s advisable to delete them without clicking any links.
Key Tips to Avoid Charity Scams
Your hard-earned money deserves to be protected. Here are essential tips to help you stay safe while donating this holiday season:
Verify the Charity: Always double-check the organization’s name and website URL to ensure you are donating to the intended charity.
Donate Directly: Only donate through the official charity website or a trusted donation platform.
Use Secure Payment Methods: Never share credit card information via email or social media. If donating online, utilize secure payment methods. For phone donations, ensure you call a verified number.
Protect Your Personal Information: Be cautious if a charity requests your Social Security number; legitimate charities don’t ask for this information. Avoid giving out sensitive personal details.
Trust Your Instincts: If something feels off, take a step back. Scammers often use emotional tactics; never feel rushed to donate. Legitimate charities will not pressure you for immediate contributions.
