One of our goals in 2011 is to increase our charitable contributions throughout the year. We’ve been getting a better handle of our finances and our monthly budget has enough room to accomodate increased charitable giving.
Have you thought about which charities you’d like to support during the coming year? Or maybe you’ve wondered how you can find a charity that’s aligned with your personal values? And how can you be sure they’re making the most of your money?
Finding the right charity for you
We love hearing about new charities from friends and family, but we rarely make donations on the spot. We’re a bit cautious with where our money goes, as we want to be sure to support organizations that address one of our social concerns and put our money to good use. One tool that has been helpful in this regard has been Charity Navigator.
Charity Navigator evaluates charities based on how efficient they are when it comes to putting their funds to good use. This site focuses on expenses related to administration and fundraising which can make up a surprisingly large chunk of their finances. When you dig into the data, you’ll find that some charities have a lot of overhead, whereas others are very efficient.
Our personal picks
In case you’re curious, here are some of my favorite charities:
- DonorsChoose – This is an incredible educational charity that allows you to pick the classroom where you think your money should go. You can search by financial need, subject, or geographic location. You’re directly helping children better their education one classroom at a time.
- Charity: Water – I love Charity: Water’s mission of providing clean drinking water to developing countries. Each $20 contribution can provide a person with clean water for 20 years. They also have larger projects you can sponsor that can help villages and schools around the world.
- Camp Sunshine – Camp Sunshine provides children (and their families) with life threatening illnesses with a support network, counseling services, medical services, and meals in a relaxing camping environment. It’s focused on helping the whole family cope and it’s a year round program.
We feel these organizations fill an important need, and also have low overhead costs. In fact, Charity: Water spends 100% of your money on program services related to providing people with clean water. That was a big factor for us when choosing them. As you can see, it’s impossible to identify a single best charity – the key is to find one that works for you and to donate your money and/or time in support of the cause.
Making your contributions
Some people may be afraid to start regularly giving because they think it’ll be a financial hardship to set up and maintain, but that’s not been our experience. My suggestion is to take advantage of automatic billpay to make regular contributions. Not only will you increase your chances of actually reaching your contribution goals, but it’s very easy to set up and saves a ton of time in the long run.
An alternative would be to allow the charity to make an auto-deduction. Which is best? My recommendation is to go without whatever makes you most comfortable. In our case, we prefer to send the contributions ourselves for two main reasons:
First, this is fairly unlikely, but it’s possible for an organization to inadvertently draft the wrong amount from your account, potentially leaving you in a bind. Second, if you have your a financial hardship of your own, you can easily reduce or pause your contributions if you’re sending them in yourself vs. allowing an auto-deduction.
You can also put your contribution on your credit card if you feel more comfortable that way, though it’s important to keep in mind that the charity is likely to face credit card processing fees. PayPal is another option, though once again your contribution is likely to have a slightly reduced impact due to the associated fees.
Tax deductions for charitable contributions
Most people know that you can take an income tax deduction if you make a cash donation, or if you donate something of value. Just be sure that you have proper documentation.
But did you know that you can also take a tax deduction for certain costs related to donating your time? For example, if your volunteering assignment includes driving, keep a record of the mileage you put on your vehicle as you can deduct it at the end of the year.
If you’re unsure of what qualified, check with the organization you’re working with as well as a tax advisor to be sure you’re on the right track.
Your thoughts on giving back
I’d love to hear your thoughts on charitable giving. Which charities are your favorites, and why? How did you find them? And how do you structure your contributions?