Giving away some of your money is a great way to support the people and organizations you love. But there are smart ways to do it, minimizing your taxes and avoiding pitfalls along the way.
Once you have provided for your own retirement and met your personal expenses, think about benefiting others – whether it's your parents, children, grandchildren, friends, neighbors, church, synagogue, mosque, school or service organization. Your money is usually happily received, and you get a warm feeling from being a benefactor.
Utilize Charitable Giving
This type of giving may provide current tax savings and minimize or avoid estate taxes. The money you donate is an investment in your community, the nation and the world. Of course, it's wise to be cautious when donating. Research the organizations to which you wish to donate, and be sure that your money will be used in the way that you desire.
Charity Giving Precautions
These steps will increase the probability that your donation dollars will benefit the people and organizations you want to help.
Trust, but verify. Be cautious of charities that spring up overnight in connection with current events or natural disasters. They may make a compelling case for your money, but they most likely don't have the infrastructure to get your donations to the affected areas or people.
Call the charity. Ask if the organization is aware of a solicitation you received and has approved it. If not, the solicitation may be a scam, mounted in the charity’s name.
Check with local recipients. If giving to local organizations is important to you, call the organization to verify they will benefit from your generosity.
Verify the contribution is tax deductible. Your contribution may not be deductible. If a tax deduction is important to you, ask for a receipt showing the amount of your contribution and stating that it is tax deductible.
Trust your instincts. And check their records if you have any concern about contributing. Callers may try to trick you by thanking you for a pledge you didn't make. If you don't remember making the donation or don't have a record of your pledge, resist the pressure to give.
Ignore high-pressure sales. Legitimate fundraisers generally don't push you to give on the spot. Be wary of charities offering to send a courier or overnight delivery service to collect your donation immediately.
Consider the costs. When buying merchandise or tickets for special events, or when receiving free goods in exchange for giving, remember that these items cost money and generally are paid for out of your contribution. Although this can be an effective fundraising tool, less money may be available for the charity.
Be wary of promises of sweepstakes winnings in exchange for a contribution. Under U.S. law, you don't have to donate to be eligible to win a sweepstakes.
Do not send or give cash. Cash can be lost or stolen. For security and tax record purposes, it's best to pay by credit card or check -- made payable to the charity, not the solicitor.
Talk to your financial advisor. Your advisor is one of your best sounding boards and safeguards as you consider your charitable contributions.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by FMeX.
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