In it’s 2019 report on philanthropy, Giving USA, likely the top authority on charitable giving in the nation, announced a number of important findings. Two of the most interesting were:
- Charitable giving in the US reached a record high in 2018, with Americans donating an estimated $428 billion, topping the $400 billion mark for the 2nd year in a row.
- Nearly 70% of that total was donated by individual donors, as opposed to corporations, charitable foundations and bequests.
Notwithstanding this incredible generosity of individual Americans, a study by the Chronicle of Philanthropy found that the share of Americans giving to charities is actually on the decline. How is that possible? Some experts point to the growing affluence gap, meaning that as more wealth is concentrated in fewer people, those individuals on the losing end of the deal are finding it harder and harder to spare some of their hard-earned funds for charitable causes. Now, this doesn’t mean Americans are in less of a giving mood, just that more of them are not quite sure how to go about doing it. Sound familiar?
That’s where this guide comes in. Below you’ll find a wealth of information and advice for giving to those deserving causes that you care so deeply about without breaking your tight budget. You’ll learn how to determine just how much you can afford to give, as well as where your donations will do the most good. More importantly, you’ll find plenty of tips for effective giving regardless of the amount of cash you have available – or even if you don’t have any cash to donate at all. Finally, we speak with Patrick Placzkowski, CEO of the Boys & Girls Clubs of Grand Rapids, who offers his take on the importance of giving – of both time and money – to worthy charitable causes.
Before You Give
Whether you are rich or not-so-rich, and whether you’re in charge of a major charitable fund or just an average citizen looking to do a little good for the community, it’s important to know that what you’re giving away is actually going to help others in need. So, before making any contribution, consider your answers to the following questions:
How much can I afford to give?
Tight budgets mean tough choices, and how much any individual can afford to give to charitable causes is a purely personal decision, as it should be. However, there are statistics on how much people are giving, or at least how much people are taking in charitable deductions on their federal income taxes:
| Adjusted Gross Income | Charitable Contribution Deduction (average) |
|---|---|
| Under $15,000 | $1,471 |
| $15,000 to under $30,000 | $2,525 |
| $30,000 to under $50,000 | $2,871 |
| $50,000 to under $100,000 | $3,296 |
| $100,000 to under $200,000 | $4,245 |
| $200,000 to under $250,000 | $5,470 |
| $250,000 and above | $21,361 |
Again, it’s important to keep in mind that the above figures are averages regarding how much people are giving to charity, and do not reflect the unique financial and life circumstances of any particular person in any given year. In other words, how much others are giving and how much you should be giving are entirely different matters.
It’s also important to remember that donating to a charity doesn’t have to mean donating money. Put another way, your value to worthy charities is not is not limited to your net worth. More on that below.
How do I know if the charity I’m considering is legitimate and worthy of my contribution?
Unfortunately, too many people end up donating to fraudsters who are only out to line their own pockets. The sad truth is that there are more than a few illegitimate “charities” operating out there, and it’s often extremely hard to separate out the honest ones from the phonies. To avoid this problem you’re going to have to do a little research. Fortunately, there are a number websites where you can check on the trustworthiness of charitable organizations:
- BBB Wise Giving Alliance:
Sponsored by the Better Business Bureau, The BBB Wise Giving Alliance produces reports on approximately 1,300 nationally- soliciting charities, evaluating each against 20 accountability standards (such as solicitations, finances, oversight, etc.) Donors can access reports via the website’s search engine or by browsing its charity list. Additionally, reviews of more than 10,000 regionally-soliciting charities can be accessed by visiting the appropriate local BBB website. - Charity Navigator:
Charity Navigator examines tens of thousands of financial documents to assess the worthiness of more than 9,000 U.S. charities, both large and small. Visitors to the Charity Navigator site simply enter the name of the charity they wish to check out to receive a numbers-based rating that considers the charity’s financial health, accountability and transparency. - Charity Watch:
Charity Watch provides letter-grade ratings for charitable organizations based on a range of criteria including audited financial statements, annual reports, tax statements, and more. Ratings assess effectiveness and legitimacy. Site visitors can also find out about any reported instances of charity abuse. Donors can search charities by name or browse top-rated organizations by category. - GuideStar:
GuideStar provides information on over 1.8 million IRS-recognized tax-exempt organizations (nonprofits, community foundations, etc.) as well as thousands of faith-based nonprofits that do not require IRS registration. Basic information can be accessed instantly via the website’s search engine. Users can filter their searches by type of organization and geographic location. More detailed data is available, but requires (free-of-charge) registration.
Additionally, most states require charities or their fundraisers to register with the state before soliciting donations within their borders. You can find out if a charity has registered by contacting your state’s charity regulator.
Besides checking one or more of the above-listed resources, it’s a good idea to press a little further for more information on the charities you’re considering. Here are a few tips:
- Google the name of the charity along with words like “rating,” “review,” “scam,” “fraud,” or “complaint.”
- If making a money contribution, ask, “How do they want me to pay?” Legitimate charities take checks and credit cards, but will never ask for gift cards, wire transfers or cash. If someone is asking for one of these last three, they’re probably scammers.
- Get the specifics on how your donation will be used. Legit charities can tell you, scammers won’t.
- Scammers like to rush you into making a decision, so if you feel pressured, back away.
- If someone tells you that you are guaranteed to win a sweepstakes if you make a donation, you’re being scammed. Claiming such a win is not only a con, it’s illegal.
- Always independently confirm a charity’s tax-exempt status. Never take their word for it.
- Finally, trust your gut. If something doesn’t seem quite right, back away, at least until you can confirm an organization’s legitimacy.
Does the charity represent a cause that I support?
Most people’s charitable giving action plan consists of contributing to the first charity that asks for a donation. There are, however, literally thousands of worthy charitable causes out there, each with its own unique area of interest, specific goals, mission, and effectiveness. That means you have a lot of choice in the types of causes to donate your time or money to. Maybe it’s time to become more proactive. But, how do you know which charities to choose?
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Start with your own mission statement:
All charitable organizations have their own mission statement that defines their cause and provides a general description of how they intend to address it. You can do the same thing. Consider the issues that matter the most to you personally, the ones that you feel the most passionate about. Think about how you would like to see those issues addressed. Then write it all down on a piece of paper. That’s your personal charitable mission statement. You can almost guarantee that there are one or more charities out there with mission statements that align with your own.
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Find the charities that match your interests:
The internet can help. Sites like Charity Navigator and GuideStar (linked above) allow for searches by type of cause and location. Other similar online resources include GreatNonprofits and Philanthropedia. Once you’ve identified several potential organizations, contact each and set up a brief interview. Then ask the charity’s representative these two questions:
- What has your organization done to move effectively toward meeting its goals?
- What can I do to help?
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Think small and local:
There are a lot of great charities with national and international footprints, all with names you’d recognize. These big charities garner the lion’s share of donations, often from major philanthropic sources providing huge sums of money. There are also tons of smaller, local charities, however, that focus on community-level issues and concerns. Local charities are lesser known and often overlooked by donors like you. And it’s these smaller, local charities where individuals looking to donate their time and talents are most likely to find a home.
A great online resource for finding worthy smaller, local charitable organizations is America’s Best Local Charities (ABLC). ABLC is a federation of over 700 member-organizations that work on behalf of children, the elderly, the ill and disabled, animals, and many other worthy causes. The site’s search engine allows donors to locate charities in their local areas by charity name, category or keyword.
Think you’ve been the victim of a charity scam? Here’s how to fight back.
The number of fraudsters masquerading as representatives of worthy charities is staggering, and the reason that so many of them are in operation is that, unfortunately, they’re getting away with it. That needs to stop, and it’s the average American citizen that’s in the position to do it. If you’ve been bilked of your hard-earned cash by a charity scam or think you’ve been approached by a scammer, this is what you can do:
- Contact the IRS:
The IRS is in charge of the regulation of nonprofits on the federal level, so that’s where you want to go to report bad behavior by a charity. You can fill out Form 13909 and submit it by mail to: IRS EO Classification, Mail Code 4910DAL, 1100 Commerce Street Dallas, TX 75242-1198. You can also fax your form to (214) 413-5415, or email it to eoclass@irs.gov. - Contact the FTC:
The Federal Trade Commission would also like to hear about any charity scam you run into. Go online and use the FTC Complaint Assistant, or call them at 877-382-4357. - Contact a state authority:
The IRS suggests that you copy any complaint you file with them to your state’s tax agency and/or charity regulator. - Call the cops:
Finally, if you’ve been approached in-person by someone soliciting a charitable contribution whose legitimacy you question, pick up the phone and inform your local law enforcement agency. They’ll definitely want to know if a scam’s being run in their jurisdiction.
Money Donations on a Budget
The simplest method of giving to charity is to write a check. Simple doesn’t always mean easy, however, and if you are reading this, writing a big check is probably out of the question. That’s alright. The important thing to remember – and virtually every charity will tell you this – is that no donation is too small. In addition, there are a few strategies you can use to make giving easier and increase the impact of your money donation, regardless of its size:
Matching Donation Programs
Lots of employers today have established matching donation programs in which they will match an employee’s charitable gift with an equal gift of their own, thus doubling the effectiveness of the employee’s donation. So, be sure to check with your employer to see if your company has a matching donation program.
Tax Refunds
It’s a bit of a mind trick, but sometimes people think of their tax refund as a gift or found money, which might make it easier to simply turn around and donate that refund to the charity of your choice. Interestingly, such a contribution will likely be deductable on your next year’s tax return.
Set Up Automatic Donations
One way to make giving on a budget easier is to include donations as a part of your monthly budget. And setting up an automatic donation – from your checking or savings account, or a debit or credit card – can make giving practically painless. Automatic donations are also great for charities because they can better manage their own budgets when they’re sure your donation will be coming in.
Giving to Charities without Giving Money
It’s no secret that most charitable organizations need money donations to survive, and writing a check to your favorite charity is always greatly appreciated. But direct cash donations are only one of the means by which charities bring in the funds needed to pay the rent, keep the lights on, and carry out their good works. There are literally dozens of other ways charities benefit from the generosity of the public, and they all depend on small, individual donors like you. Here are a few popular options for giving to great causes that don’t require opening your pocketbook. Some are obvious, while others you’ve likely never thought of before. But all will make a real, positive difference in your community.
Donating and Taxes
Giving to a good cause is reward in itself, but that doesn’t mean you shouldn’t take advantage of any tangible benefits coming to you as a result of your giving. One of the best benefits to charitable giving is the tax deduction. The tax laws for charitable contributions can be difficult to understand. They are tax laws, after all. Nevertheless, here are a few general guidelines to keep in mind:
- Donations to most charitable organizations are tax deductible. Not all tax-exempt organizations qualify, however, so be sure to confirm that contributions to a particular charity are tax deductable before making yours.
- Taking a tax deduction for a charitable contribution against your income tax requires itemizing your deductions. You may end up better off taking the standard deduction.
- There are limits to just how much you can deduct. Fortunately, your total charitable contributions will have to be pretty big for any limits to apply.
- Donations of property are generally tax deductable. The value of the deduction is normally equal to the fair market value of the property at the time of the donation.
- The value of volunteer time is generally not tax deductable. However, you may be able to deduct for any expenses you incur as part of your charitable volunteer work.
- You must be able to document any charitable contributions you claim for a tax deduction. Whether giving cash or property, be sure obtain and keep written proof of your donations. Donations of $250 or more require written acknowledgement of the donation from the charity itself. Bigger donations, especially gifts of property, may need additional documentation and require completion of certain tax forms.
For more information on charitable contributions and taxes, check out this IRS webpage.
Good for You: The Positive Effects of Giving
Donating your time, stuff or money to a worthy cause obviously benefits the charity, and may provide the donor with a nice tax deduction, to boot. That’s all good. But don’t overlook all of the other benefits giving provides the giver. There are lots of them, including enhancing the meaning of your life, motivating family and friends to be more charitable, and nurturing qualities of generosity in your children. Finally, giving to charity just makes you feel good, and you don’t have to simply take our word for it. A research study conducted by the University of Oregon and reported by the National Institutes of Health found that voluntary giving by study participants activated the pleasure centers in the brain. Here’s the takeaway: Generosity is good for both those who give and those who receive. And that’s regardless of the size of the gift.
Interview with Expert Patrick Placzkowski
Patrick Placzkowski is the CEO of the Boys & Girls Clubs of Grand Rapids, Michigan. Before joining the Boys & Girls Clubs, Mr. Placzkowski spent more than six years leading the fundraising initiatives of the Van Andel Institute as their Director of Development, and over nine years in various roles at the American Institute for Cancer Research in Washington, D.C. Mr. Placzkowski holds a bachelor’s degree from the University of Wisconsin Stevens Point and master’s degree from the University of Illinois – Urbana.
Can you tell us a little bit about the Boys & Girls Clubs of Grand Rapids?
As with Boys and Girls clubs across the country, we serve youths, in our case youths six to 18. In a lot of cases, the kids we serve are pretty severely underprivileged and from the neighborhoods are clubs are in. So, we provide a safe place for them to come to after school from about three until about eight o’clock at night. Keep them out of trouble a little bit, but we also help a lot with academic support, try to help them with their homework and their school. And then we do a lot of character development, getting them ready to become useful and productive citizens so that by the time they’re 18 they’re able to be great community leaders and go on to better and bigger things.
What role do money donations play in your organization?
We rely almost entirely on contributions from individuals. We do receive a small amount in government grant funding, but it probably represents I’d say about 10% of our income, and half of that is just to reimburse for the hot meals we serve every night here at the club. We of course rely on some larger family foundation gifts from here in the Grand Rapids area. We also get support from local corporate sponsors and businesses. A lot of companies will make some kind of a sponsorship for an annual support pledge that also brings in volunteers.
Then we have a whole lot of individual donors at the $50, $100, $250 levels, and they are crucial for us because that annual support goes for just keeping the lights on and doing the work that we do every day. A lot of those gifts come with no strings or restrictions attached, so those are really important. Lots of times donors will frequently give $100 and their company will match that, so that becomes a $200 gift, or a $50 gift becomes a $100 gift.
You’re talking about in-kind donations. Is that correct?
No, those are cash. So, if you’re thinking about giving on a budget, one way to really leverage whatever it is you are able to give is to see if your employer has any kind of a matching program, and a lot of companies here in town do that. Then, sometimes companies will match cash for volunteerism. You know, people give to their church and they give to their PTA or whatever it is, and then really don’t have any more room [in their budget], but they’re able to come in and volunteer. Then their company will make a contribution to match those volunteer hours. A lot of companies have that, so if people don’t know, they should check with their employers. That’s a great way to make a difference.
You know, you touched on something that I didn’t realize. When you get donations from foundations, there are certain limitations imposed on how you can use the money. But that’s not true with individual donations, so you can use that money to cover the stuff that the bigger donations can’t.
That’s correct. The foundations will give you large amounts of money, but frequently they want it to be for a very specific program, and that’s wonderful. But we also need the funds to be able to do the daily running of the clubs. So being able to pool those general donations where the strings aren’t attached – to be able to literally keep the lights on or to fix the roof when we need to, or there’s been raccoon damage at camp – having those kinds of funds available is really, really useful and necessary for us.
So, if people wonder if giving $10 or $12 really makes a difference, the answer yes.
Yeah, it really does make a difference.
How important are volunteers to your operations, and what kinds of things to they do?
We use volunteers in all kinds of ways. We have a lot of general support, like spring cleaning at our camp and landscaping work around the clubs. If we have handy volunteers that can take on that work, then that ultimately allows us to spend money donations elsewhere. We also have people who come in and just volunteer with the kids in the games room or gymnasium, or working in the learning center helping kids with their homework. Sometimes people come with specific skills, maybe they’re an engineer and really good at math, so we’ll try and find a niche for them in the learning center where they’re doing STEM education work. Or if someone is really good at art, we’ll put them in our art room. If someone is a good musician and has a music background, but maybe they’re working at an insurance company, we’ll have them do music with the kids, doing piano or guitar or singing.
So, if someone out there is thinking they would like to give a little of their time but doesn’t feel they have any specific talent to share, they should still come in.
Absolutely. Everyone has something that they can offer, especially as long as people like kids and enjoy being around them. Anyone who wants to lend their hands or their heart or their mind, we’ll find something for them to do.