Giving back to the community is an important priority for many clients, and is a big part of what we do at Glassman Wealth. When you’re donating to a charity whether it is your local church, community center, or to a cause that could change the world like cancer research, your charitable giving can make a big impact. However, it is important to know your intentions are being followed and your dollars aren’t going to waste after being donated. There are many charities that seem to align with your desires, but how much of your gift is actually going where you want it to?
When looking to donate to a charity or cause, there are a few important considerations prior to making the donation:
Decide on your goals when donating to charity
Before writing a check, take a minute to consider the impact you want your donation to have. You may have a specific cause or charity in mind, but consider where you want your dollars used within that organization. You can often restrict your gift so that your charity dollars go towards a specific activity or initiative. Do you want to encourage scientific research, build awareness about a cause, fund disaster relief, or fund a specific project?
For example, after Hurricane Katrina, we helped organize clients to support the child life department at New Orleans Children’s Hospital. Thinking through these considerations in advance can make donating more rewarding, and smart planning can really help move the needle for a particular cause.
Research the charity
Whatever cause is close to your heart, you should make sure your dollars aren’t going to waste. Unfortunately, many charities have significant administrative costs and other overhead. That means a portion of your donation could be going to salaries, rent, fundraising costs, advertising, and other administrative expenses. If it’s important to you that your dollars are given directly to scientific research or the victims you’re trying to help, you should make those decisions in advance and consider donating to charities that fund your cause directly.
Using a tool like Charity Navigator, it’s easy to research a number of charities. Passionate about the environment? Perhaps the charity you had in mind spends a lot on advertising and only puts a small portion towards environmental relief, or perhaps it doesn’t do much work locally. Using Charity Navigator, you can see not only how much of their expenses are actually put towards a cause, but you can view how transparent the charity is, see their revenue, and even offer up other charities that do similar work.
Shop around for other charities
Perhaps you have a goal in mind, like aiding disaster victims after a catastrophic event, but the groups you’ve heard of are huge national organizations that benefit other causes too. Tools like Great NonProfits can help you find something more local or specialized. Once you’ve done your research, you can narrow your search and be sure that your dollars are going towards the right cause.
Give to charity in tax-efficient ways
Sometimes the best way you can make a difference is with a monetary gift. However, there are more tax-efficient ways to give than by writing a check or donating with a credit card. For example, if you hold any appreciated securities, consider donating shares of the stock or mutual fund. The charity gets the full amount of your donation, and both parties may avoid paying capital gains taxes on the sale of the security – a win-win.
You may also consider setting up a donor-advised fund to allow for greater flexibility in the timing of your gifts and make your record-keeping simpler.
Donate your time
There are other ways to give to a cause than donating money, and often volunteering can be an even more rewarding experience. Volunteer Match is an excellent resource to find organizations close to you that could use your skills and expertise. Remember, although monetary gifts play an important role in funding your charitable endeavors, a charity may need people more than it needs money.
Whatever your approach, smart planning can go a long way. Your financial advisor is ready and able to help with your charitable endeavors, and may offer some alternative approaches. Thinking through your goals and planning in advance can make a bigger impact, could offer a tax benefit, and may help move the needle more for a cause or organization you support.