Personal Finance

The Giving Season: 4 Things to Know About Donating to Charities

Woman carrying armful of wrapped gifts
Credit: Shutterstock photo

The holiday season is about giving—and for many people, that means more than just presents.

The Tea

If you're anything like us, you've already received dozens of mailers from national and local charities alike. There's a reason for that. According to UNICEF, Americans usually make about one-third of their annual donations to charity during the holiday season.

It makes sense. The holidays in general make people feel more charitable. Annual bonuses are on the horizon. And many people want to get their donations in before the end of the year so they can lock in some of the tax advantages that come with giving.

And for some, giving is its own reward. Several studies, such as The Socialization of Financial Giving: A Multigenerational Exploration, show that "those who routinely give tend to be happier, healthier (both physically and mentally), and feel a sense of greater purpose."

Whatever the reason, we have a few thoughts to share with you about how you—and the loved ones in your life, including your kids!—can help further the causes you believe in.

The Take

While you can give to charity at any time, now's the time of year when many opportunities will drop right in your lap. But before you give, here are some things to keep in mind:

Yes, You Can Get a Tax Break for Giving, But …

Everyone is generally aware that if you donate to charity, you can get a break on your taxes.

But the rules are hardly cut-and-dried, and not everyone is eligible for these breaks.

For one, this perk is only available to people who itemize deductions on Schedule A of their federal tax returns. If you claim the standard deduction, sorry—you're left out.

Also, donations are only tax deductible if they're made to a qualified organization. This generally means organizations operated exclusively for charitable, religious, scientific, literary, or educational purposes, though others—veterans' organizations and fraternal societies, for instance—may also qualify. The Human Fund does not.

The Giving Season: 4 Things to Know About Donating to Charities

Our advice? If you do want to leverage your giving for a lighter bill from the IRS, check out our guide to the charitable tax deduction.

All Charities Aren't Created Equal

In an ideal world, every charity would be sinking every possible dime into the causes they support. But that's just not the case. Some charities are more efficient and effective than others … and unfortunately, some charities are outright scams.

So if you want to make sure your money is making the most impact, you'll have to do a little homework. You can start with a few sources:

  • The IRS's Tax-Exempt Organization Search (TEOS)TEOS allows you to determine whether an organization is eligible to receive tax-deductible charitable contributions. It also provides other info such as the organization's tax-exempt status and filings. This source won't necessarily tell you how effective the organization is, but it will help you find out whether it's a legitimate charitable organization.
  • org (BBB Wise Giving Alliance): The Better Business Bureau (BBB) evaluates charities using its 20 Standards for Charity Accountability, which include factors such as conflict of interest, effectiveness policy, expenses, complaints, and more. This helps provide insight into not just an organization's legitimacy, but how well they serve their cause.
  • Charity NavigatorCharity Navigator uses easy-to-understand ratings as a foundation for helping givers determine the best places for their money. This organization has rated more than 200,000 charities to "shine a light on the cost-effectiveness and overall health of a charity's programs."

Philanthropy Isn't Just for Adults!

Maybe your kid is already old enough to know they want to change the world. Maybe your kid is just worried about making a year-end push to escape Santa's "naughty" list. Either way, there are a few ways they can make their own impact on a number of important causes.

Surprisingly, a very common place to find giving platforms is debit cards for kids. These specially tailored platforms are designed to give children and teens a place to spend and save—but several go above and beyond by providing a place to give.

Here are four that make our "nice" list:

  • GreenlightGreenlight users can put money into Give accounts at any time. When a child is ready to send money from that account to a charity, they can either find a charity by filtering by category, or they can directly search for a charity they already know. Greenlight will then redirect your child to Charity Navigator, where they can browse or learn more about their selected charity. After choosing a charity and an amount (Greenlight requires a minimum of $10), the funds will be pulled from your kid's Give account.
  • BusyKidBusyKid not only lets children choose from around 50 charities to give to, but even solicits suggestions for additional charities they'd like to add. Its current slate includes causes such as the American Red Cross, Toys for Tots, the Special Olympics, and Alex's Lemonade Stand.
  • JassbyKids can select "Support Your Favorite Charity" in the Jassby app, which brings them to an external link that lists charities to select/search from to donate to.
  • GoHenryGoHenry members have the option to donate a small amount of money each week to the Boys & Girls Clubs of America. Donations can help feed kids after school, provide them with mentorship, and more.

Money Isn't the Only Way to Give Back

Just because you don't have extra cash to spare doesn't mean you can't participate in the giving season.

For one, you can donate goods you might have in your home. Many food pantries, charities, and religious organizations alike organize food drives this time of year. Also, homeless shelters typically accept a wide variety of items, including toiletries, bedding, feminine hygiene products, backpacks, and more.

You can also donate your time.

If you're unfamiliar with volunteer opportunities in your neighborhood, check out VolunteerMatch, which connects you with local organizations that need your help. And don't let a lack of transportation stop you from supporting your cause—VolunteerMatch displays virtual opportunities as well. For instance, you might be able to help online by translating documents, creating social media content, writing grants, making phone calls, and much more.

Hannah, Riley & Kyle

WealthUp (Young and the Invested is now WealthUp)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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