Are you wondering how to make the most of your charitable giving? By strategically planning your gifts, you can help your charity and yourself. Here are answers to some commonly asked questions.
Q. How do I know which nonprofits to support?
A. Selecting an organization is a very personal decision and depends on your values and goals for the gift. Do you prefer your donation to stay in the community, or would you like it to have a national or global impact? Do you prefer to give smaller amounts to multiple organizations or a larger contribution to a single organization? These are just some of the questions you'll want to consider.
Q. How do I know a charity is trustworthy?
A. Charitynavigator.org provides a rating system to help you evaluate the charity of your choice. They rate each nonprofit based on financial health and accountability and transparency. However, don't be discouraged from donating to a local organization that is advancing causes in your community if they don't appear or are lower on this list. Smaller charities simply may not have the same resources as a national organization to provide the reporting necessary to be on the list.
Q. How can I make sure my gift is tax-deductible?
A. Go to irs.gov to find out. Qualified nonprofit organizations include religious, charitable, educational, scientific and literary nonprofits as well as those dedicated to preventing cruelty to children or animals. (Political organizations and candidates are not eligible.) Your financial advisor can work with your tax professional to determine tax-efficient ways to give to a cause.
Q. Is it better to give cash or securities?
A. It depends. You’ll want to review your financial situation with your financial advisor and tax professional before you make a decision. There are rules regarding how much of a tax deduction you can claim depending on what you donate. With securities, whether to donate them may depend on whether they’ve risen or dropped in value, among other things.
If you decide to set up an account to handle your charitable donations, a donor-advised fund (such as the Edward Jones Charitable Gift Fund (PDF)) could be helpful. Your financial advisor and tax professional can explain how donor-advised funds work and help you weigh your options.
Q. I’d love to give back, but I’m short on funds.
A. Giving back can take many forms. What can I do? Consider donating your time, clothes or household items that are in good shape but no longer used instead of a monetary gift. Many organizations have lists of things they need on their websites.
A charitable giving tax primer
Gaining a basic understanding of how charitable giving may affect your taxes can help you get the most from your giving strategy.
Basic charitable giving strategies
Being strategic in choosing which assets to give and how to structure your giving goals can be beneficial for both you and the charity.
Advanced charitable giving strategies
If you desire control and flexibility — or if you have unique needs — you might benefit from exploring advanced charitable giving channels and strategies.
