By Barry Silverberg, Director, Center for Nonprofit Studies at Austin Community College
Giving is a very personal thing
Whether intentionally or not, giving is based upon our values, what we believe, and our inner sense of responsibility.
Before donating, there are seven questions to help maximize the impact of your giving:
1. How does giving support your values?
2. How can you give during your life and after you’re gone?
3. Which causes are closest to your heart?
4. What represents success in that cause?
5. What will it take to achieve success?
6. What can you give that will have the greatest impact on the road to success?
7. How can you incorporate philanthropy into your financial strategies to help maximize impact?
Taking this approach, philanthropy is intentional giving. Every dollar you give should be your personal contribution to strengthen the organization and causes that you believe are helping to heal the world. It should be your very personal way of affecting change for the better – whatever the organization or cause.
While the holiday season often focuses people’s attention on helping others, the interest in charitable giving should not be limited to any season.
The reality is that most contributors give to people they know and causes they deem legitimate, with the intent of making a difference in other people’s lives. Some may seek guidance from the various national charitable standard entities (called “charity watchdogs”) that purport to measure the cost-effectiveness of nonprofit organizations - including, but not limited to Charity Watch, Charity Navigator, GuideStar, Better Business Bureau, and others.
As a result of recent changes in tax laws, getting the tax benefits of charitable giving is not as simple as itemizing the deduction. A single individual must contribute $12,000 or more and a couple $24,000 or more to itemize their deductions and to get the full tax benefit of their contributions. The CARES Act adjusts this for current COVID conditions per the IRS such that “taxpayers who don’t itemize deductions may take a charitable deduction of up to $300 for cash contributions made in 2020 to qualifying organizations” - i.e., those that are religious, charitable, educational, scientific, or literary in purpose. For more info on how the CARES Act changes charitable deductions in 2020, visit the IRS webpage on this topic.
Fortunately, my experience over 45 years of working in the nonprofit arena, including over 24 with fundraising responsibilities, is that most people contribute to help others and are not focused on the tax benefits of their giving.
General tips for giving
A Consumer Reports article examined the best and worst charities for your donations and provided important tips to keep in mind in the season of giving:
1. Verify tax-exempt status. If you’re not sure whether donations to a particular charity are tax-deductible (don’t assume they are), confirm a group’s status by checking with the group or by searching on the IRS website.
2. Give directly. If you’re contacted by a professional fundraiser for a charity you want to support, hang up and give directly instead. “The fundraiser might be keeping two-thirds of the money,” says Stephanie Kalivas of CharityWatch.
3. Watch for fees. Online giving platforms and crowdfunding websites often charge payment processing fees on donations, perhaps three percent or more, which reduces the impact of your gift. The charity may also be charged transaction fees if you send your payment via credit card. To avoid those fees, consider giving by cash, check, or direct bank transfer when possible.
5. Be on guard for soundalikes. Some low-rated charities have names that resemble those of high-rated ones. “In some cases, soundalike charities are there with the intent to deceive donors into thinking they are donating to somebody else,” says Bennett Weiner of the BBB Wise Giving Alliance. In other instances, groups have similar names because they’re focusing on the same causes.”
When my wife and I contribute to an organization, we do so with no other motive than to share our blessings and to do our small part to further heal this word. We seek no plaques or recognition other than a simple acknowledgment that our gift has been received and is being used for the purpose for which it was contributed. Once we give, we trust the organization to act wisely and use our contribution effectively. If we have any concerns, we do not give to that entity. Giving is a highly personal matter. The better you understand your own motivations and the value system that underlies them, the more satisfied and better giver you will be.
For more than two decades, the Center for Nonprofit Studies (CNS) has been a leading provider of nonprofit workforce and career development in Central Texas. CNS offers certificates, classes, online resources, and leadership training within the Central Texas nonprofit sector. For more information, visit NonProfitAustin.org.