skip to main content

How to Spend Wisely on Charitable Giving

By Rich Beattie

  • PUBLISHED December 05
  • |
  • 3 MINUTE READ

At the holidays, it’s common practice to look back on the year, take stock of one’s good fortune, and think about those in need. And the resulting feelings of generosity may well culminate in searching for—and donating to—a charity.
 
If this is you, you aren’t alone. In 2017, the average U.S. household contributed $2,271 to charities and other nonprofits; these individual donations made up 70% of the more than $410 billion donated overall. And not surprisingly, charitable giving surges at the end of the year: According to one survey, almost 43% of donors gave more over the holidays than during the rest of the year.
 
But not all charities are created equal. Before you give, it’s important to take a few moments to ensure that the charity is a good match for you, is legit, is using your money wisely—and that you’re getting the tax benefit you’re due.
 
Pick Your Passion
What causes inspire you? Choose an organization that shares your values; you’ll derive more satisfaction from your donation, and it’s likelier to inspire a deeper, longer-term relationship. And remember, your choice doesn’t have to be a national organization; lots of local charities rely on contributions, and it may feel more personal for you to donate locally.
 
Do Some Research
Once you identify a charity, check it out and see how efficiently it uses its donation dollars. Websites compile important metrics from nonprofits’ public tax disclosures, such as the percentage of expenses that go directly to programs versus administrative and fundraising efforts. A good barometer is when you see that at least 75% of its funding is spent directly on the mission. (Just be aware that some newer charities—or those that work on marginalized charges—may not hit this level, in which case, you should reach out to them and ask questions.) 

Also, take a look at the organization’s transparency and accountability; find out if it documents its board meeting minutes and releases the CEO’s salary. If you’re skeptical or just want more information, ask for a meeting with someone in the organization. This way, you can hear firsthand what the long-term vision is, and the kind of communication you can expect.
 
Decide How to Divide
Don’t forget that when you give to a charity—even a small amount—it starts investing in you, by sending thank-you gifts, news updates, and requests for future contributions. All of that adds to the charity’s administrative costs; in fact, it could end up spending more on you than it received. So, avoid giving a little bit to a lot of causes. That doesn’t necessarily mean you should focus only on one or two charities. Save some of your donations for local organizations, as well as for unplanned events, like disaster relief.
 
Consider the Tax Benefits
It’s a good idea to touch base with your accountant to find out what effect your contributions will have on your taxes. This can be helpful in a couple ways. First, if you give to qualified organizations and itemize your taxes, you can claim charitable contributions as deductions—up to 50% of your adjusted gross income. Also, knowing how much you can deduct may incentivize you to contribute more, since the final “cost” of your donation will be less than the actual amount.   
 
You Don’t Need to Spend to Give
Giving money is just one way to help out a charity. Plenty of organizations also need hands-on help. Perhaps it’s volunteering to make phone calls or assisting with painting. Or maybe you can help mentor someone the organization assists. Don’t have time over the holidays? No worries; it’s a good bet the charity will be grateful for the help anytime.


Rich Beattie is a former executive digital editor of Travel + Leisure, and has written for outlets such as The New York Times, Popular Science, New York Magazine, and Ski.

Your browser is out-of-date!

Update your browser to view this website correctly. Update my browser now

×