The end of the year is a big time for giving. In fact, the average person makes 24 percent of his or her donations for the year between Thanksgiving and the New Year. There are many reasons why this is the case: the holidays are a time for gratitude and giving back, holiday bonuses put people in a position to be philanthropic, and people look to find tax-deductible donations before the year concludes.
If you’re thinking about delving (or continuing) into the world of philanthropy as the year ends, we want to make sure that you have all of the information that you need to make smart choices. Here are some tips:
Follow Your Passion
With so many amazing organizations out there – about 1 million charities in the U.S. alone! – just knowing where to start can be a daunting task. Don’t let it hold you back. Start with yourself. Think about what causes are important to you. Is it education, food security, homelessness, cancer treatment, human rights advocacy? Which causes tug at your heart strings, and make you want to contribute to change? If you choose to go with what you care about, you can (almost) never go wrong.
Do Your Research
Once you know what cause areas you’re most interested in, you need to figure out the specific organizations that are most impactful in doing that work. And to make sure your giving is as efficient, ethical, and effective as possible, you have to do your research. According to Charity Navigator, you’ll want to make sure that you’re giving to an organization that meets the following three criteria:
- Fiscal Health: Organizations that are in good shape financially have “greater flexibility and freedom to pursue their charitable mission.”
Accountable & Transparent: Accountability ensures that organizations and businesses are following good governance practices, meaning that they are less likely to be doing anything unethical. The more transparent an organization’s practices, the more likely it is that they are using donations in the ways they’ve stipulated. This is not to say that these organizations won’t have overhead (salaries, admin costs, operational expenses) – they will and they should. You can learn more about why it’s important that people who are working to address social problems get paid fairly by checking out this amazing TED Talk by Dan Pallotta. As he says, overhead is not an enemy of the cause – it’s part of it, and is actually a huge contributor to organizational growth and impact.
- Results: Of course, you’ll want to know how successful the organization has been in accomplishing their mission, and the impact they’ve actually had.
Luckily, sites like Charity Navigator exist to help you determine which organizations meet those criteria, so you can make smart choices about where you’re giving. We suggest that you start there, and then do your own research too.
Don’t Forget About Taxes
Taxes aren’t on the forefront of everyone’s minds when thinking about year-end giving. But it’s worth it to know the details about tax-deductible donations when you’re deciding where and when to contribute. Here are the basics:
- Monetary gifts made to non-profits, mileage used to drive to volunteer at non-profits, and partial-value deductions for in-kind donations (contributions of goods that you’ve donated rather than money) are all deductible expenses. Before you donate, be sure that you’ve chosen qualified charitable organizations, as only those will be deductible.
- Contributions are deductible in the year they are made, so donations made before the end of 2014 count for 2014 (regardless of whether or not you pay your credit card bill this year). Same goes for checks – they just need to be mailed by December 31, 2014, not necessarily cashed.
- Any cash deductions, regardless of the amount, must be substantiated by a bank record.
These are the most important rules, but we recommend that you take a moment to familiarize yourself with these year-end giving tips from the IRS so that you can make the most of your final contributions of 2014.
Stay on Top of Your Investment
After you’ve made your donation, we highly encourage you to follow up with their progress afterward. Not only will this be rewarding for you as a contributor, but by sharing their work with your network, you can also help your organizations gain new visibility. It’s people like you that are keeping many of these organizations afloat, and your contributions and support make a huge difference on the level of impact they are able to make. Charity Navigator recommends that you conduct an annual review of your giving portfolio, looking at the progress reports of each organization you’ve supported, and continue to support those who are using your donations properly and taking concrete steps to contribute to meaningful change.
Giving to organizations and businesses that are creating change in the world is SO important, and we hope that you take some time to think about how you can contribute as 2014 comes to a close.
Happy holidays to you and your loved ones!