July 2, 2020
Giving to charities can easily be left out of your budget. No matter the size of your paycheck, set aside a small amount of money for organizations and charities of your choice throughout the year. By setting a budget for giving, you can make an impact on your community and find ways to support causes you are passionate about.
Get your entire family involved by speaking with them about what types of causes they are interested in supporting. Hearing from and including your children in the decision-making process can give them a good example of generosity and philanthropy. Donate at a higher rate to causes your family supports while setting some aside for other one-time donations.
Consider causes that directly impact your community, like an organization building a new park, a non-profit arts organization, or a city-wide initiative. Be open to supporting charities of all sizes by having regular conversations about causes you’re passionate about.
Always research an organization before donating to learn more about their history, their mission, and their track record. In addition to their website, look for articles in the news or other trustworthy sources. Knowing what goals an organization has for their funding and how they spend donations can better equip you to give.
Consider whether you can write off your donation in your taxes by researching an organization’s 501(c)3 non-profit status through the IRS’ exemption database. Always keep in mind that physical goods or services, like clothing, should also be included in your taxes when provided to a 501(c)3 non-profit.
If you are considering donating to a larger, national organization, learn how donations are used through the Better Business Bureau. Many national organizations have local chapters or representatives that can answer your questions as well. No matter the size of the organization, don’t be afraid to inquire about how your money will directly support their cause.
Always contact an organization to find out how they prefer to receive donations. Avoid donating in cash unless a receipt is immediately available. Check the security of a digital donation, especially if you are giving a larger sum of money. Consider a recurring monthly donation as part of your regular budget. If you are unsure how to best contribute directly to a cause, feel free to request a specific use for your donation such as a community event, specific activity, or program.
Some organizations may not be seeking funding; these organizations may find specific goods or services as a better trade than financial contributions. This can be a great way to give back when you may be looking for work or unable to contribute financially due to personal hardships.
It is difficult to determine how much you plan to give if you have previously donated in the moment. Building a solid plan will give you peace of mind and security in your finances. Before you determine how much you can give in a year, calculate how much you typically spend on necessities like rent, food, and other bills. Many set a goal to give between 2-10% of your taxable income to charities throughout the year. If you are better suited to give goods or services, make a list of items you want to start collecting.
Breakdown your giving budget into quarterly goals and estimate how much you would like to allot each month to donations. Take holiday giving into consideration when making giving plans for the year. Remember that there is no “season” for giving if you have a budget in place.
Always keep a written record of donations given throughout the year to claim deductions on your taxes. Get a bank record such as a cancelled check or a letter from a charity confirming your donation amount and the date given. If you donated more than $500 in goods or services, use the IRS website to check the fair market value (FMV) of goods and fill out IRS Form 8283 to report each donation. When it comes to setting your budget each year, the more information you have about your giving habits, the better.