How to be an effective giver

When you donate to charity, is your money really going where you think it is? Here are some tips on how to give more effectively.

Ben Luthi

Dec 24, 2013   |   54 views   |   15 shares
  • We’ve all heard the saying, "It’s better to give than to receive." Helping others in need makes us feel good. Sometimes it’s easy to forget about what we have, and giving to others in need reminds us how blessed we are. It also makes us feel good to have a positive impact, whether big or small, in somebody else’s life. But you might be surprised to know that the organization you give to may not be using your money as effectively as you think. Here are some tips on how to give more effectively.

    1. Decide where to give

    It’s not uncommon to feel bombarded by opportunities to give. Many of us have seen the container in the check-out line at the grocery store, or have been asked by the cashier if we want to donate to this or that. Our children participate in fundraising drives through school. Some of our employers do food drives during the holiday season. Social media has only intensified the barrage. But the question you need to ask yourself is what impact do you want your money to have?

    Are you an advocate for the hungry, homeless or illiterate? Are you passionate about the arts or education? Do you belong to a church that you’d like to support? Or maybe you have a family member who has suffered from a particular disease and you want to help support research for a cure. There are so many possibilities and no cause is necessarily better than another. Just choose what is important to you.

    2. Eligibility

    One of the benefits of charitable giving is that you may be able to deduct the amount you donate from your taxable income at the end of the year. Though, it’s important to make sure the organization to which you donate is eligible as a 501(c) (3). Churches and some religious groups are not required to file for the 501(c) (3) designation but still qualify for the tax deduction. If in doubt, check the IRS website for confirmation.

    Some people say that using the tax deduction on donated money, specifically to religious organizations, can come across as doing it for the wrong reasons. This may sound logical if you are donating solely for the deduction. However, if you check your reasons for donating and none of them have to do with personal gain, there should be no problem with receiving this added benefit.

    3. Do your research

    My favorite resource for research is Charity Navigator. They grade charities on financial responsibility, accountability and transparency. It’s helped me realize that a lot of the “big name” charities aren’t necessarily as effective with donations as some of their smaller counterparts. Religious organizations are not listed because they are not required to file certain financial data to the IRS, and some small charities are not listed, but it’s a great resource to start your research.

    Be careful of charities whose names sound like more notable organizations. Check the charity’s commitment to donor’s rights to privacy. Be wary of “middlemen” who take a cut of your donation. If you receive a call from a telemarketer about donating to a cause, hang up and find the organization online. If you are directed to a website that organizes fundraising, make sure to donate through one that makes the added fee optional or additional to your donation. Confirm the 501(c) (3) status, not only for the tax deduction, but also to ensure the legitimacy of the organization. To sum it up, be smart and proactive about your giving. Don’t give when asked just to escape feeling guilty.

    Giving your support to a charitable organization can be satisfying and help you be happier. In order to amplify that feeling, take the time to be a little more invested in making your donations count for the causes you believe in and the people for whom it is intended.

Ben recently graduated from Brigham Young University and is living with his wife, Kilee, and dog, Paisley, in Arkansas. He has a passion for personal finance, sports, and learning. Ben recently started a blog at www.wealthgospel.com where you can find more of his opinions on personal finance. His life goals are to write about personal finance all day and start a non-profit organization to help others become self-reliant and to find their true potential. On any given day, you could find him eating homemade salsa, picking blackberries, or staying up until 3 a.m. to finish a book.