The leaves are changing, pumpkin spice has once again taken over coffee shops and snapchat filters, and shorts and sandals have been swapped out for sweaters and boots (okay, this may be truer in New England than some other parts of the country, but we know you SoCal folks watch these changes from a distance with thinly veiled autumnal jealousy).
Besides these changes heralding Santa, New Year’s Resolutions, and enough celebratory food to make those resolutions include gym memberships, this time of year also ushers in a spirit of giving, and a surge in charitable donations.
To help you navigate your altruistic intentions this holiday season, here is a helpful handbook for giving to charity.
Who/Whom (grammar nerds, we’ve got you covered)
So who gives? According to Charity Navigator, 69% of Americans give to charity, and 64% of those donations are made by women!
Those who give of their time also seem to be giving of their funds. People who volunteer are more than twice as likely to give to charity.
To whom are all these women (and you fabulous, charitable men) giving?
Nonprofits, Charities, and Foundations.
These three types of organizations have a lot in common, but there are some important differences. (More info on these similarities and differences can be found in this week’s Jargon Hack)
Recommended Reading: Nonprofits: What You Need To Know In Under 6 Minutes
Here’s what you need to know in order to be a guru of giving this holiday season:
A nonprofit is a business that is granted tax exempt status by the IRS. Nonprofits must be deemed to “generate public benefit.” There are 34 different categories of nonprofits defined in the Internal Revenue Code. 22 of these don’t provide you with a charitable contribution deduction.
Examples of nondeductible nonprofits include: veterans associations, social clubs, and sororities and fraternities. Greek life may be fun, but it’s not tax deductible.
If you’re looking to get that deduction, one way to ensure that is to donate to a charity.
When a nonprofit meets the IRS standards to be deemed a charity, you can claim a charitable contribution deduction when you donate! Tax Code Nerds, you can check out the details of these requirements and regulations here.
A brief sampler:
(The following examples are intended to educate, not endorse. We don’t endorse any particular nonprofits, and we are simply using the following information to illustrate important distinctions. Choosing to give to charity is a personal decision, and all information presented here is intended to empower your charitable giving choices. And with great power comes great…oh, you get the point.)
charity: water
charity: water is a nonprofit organization that brings clean and safe drinking water to people in developing countries.
As far as taxes are concerned (and how you’re concerned if you want to properly claim your deductions) charity: water is a 501(c)(3).
Kiva
Polonius may have had the best intentions for Laertes and Ophelia when he advised “Neither a borrower nor a lender be,” however, there is an interesting charity challenging that maxim.
Featured in Nicholas Kristof and Sheryl WuDunn’s illuminating book, Half the Sky, Kiva allows donors to provide loans to help alleviate poverty. You can lend as little as $25 to help a borrower start a business, go to school, or access clean water.
It’s a pretty ingenious model. You can browse through borrowers by category (including Women, Education, and Arts), make a loan, get repaid, and then choose to withdraw your loan or use your repayment to support another borrower.
Private Foundations are charitable organizations that don’t qualify as a public charities. This type of nonprofit is usually created with an initial donation from an individual or business. The initial donation is often invested, and then the income from investments funds the charitable activities supported by the foundation. The funds and programs of private foundations are managed by their own trustees and directors. Trustees have a fiduciary responsibility to their foundations.
Recommended Reading: Fiduciary you say? Find that jargon hack here.
One of the most famous private foundations in the world is the Bill & Melinda Gates Foundation, whose founders identify as “impatient optimists working to reduce inequity.”
Recommended Reading: Do You Roll With Buffett?
What
A charitable donation is a gift made by an individual to a charity, nonprofit, or private foundation, as far as your taxes and any potential deductions are concerned, anyway. That doesn’t mean that the apple you gave to the homeless man on the street this morning wasn’t charitable, it just means that we are talking about the particular kind of donations that you can legally claim as deductions when you’re filing your taxes.
In 2015, Americans gave $373 billion in charitable donations, and 71% of that was given by individuals like you and me! And in 2014, charitable donations made up 2.1% of the GDP!
When
You’re reading this just in time! Turns out that December is our favorite month to give. In 2014, charitable donations made in the last month of the year accounted for 31% of all donations! (I guess the Grinch and Tiny Tim taught us something after all).
There are also initiatives that help remind us to give at certain times of the year.
Giving Tuesday was created as a response to Black Friday and Cyber Monday. The Tuesday following Thanksgiving, #givingtuesday “Kicks off charitable giving season” and is “a global day of giving fueled by the power of social media and collaboration.” In 2015, approximately 700,000 people participated and raised over $116 million online in over 70 countries. Giving Tuesday is a resource, helping you find ways to give, whether you’re giving of money or time.
Entire months are also dedicated to charitable giving.
Movember raises awareness and funds for men’s health by way of the ‘Stache. There are three ways to participate: Grow your Mo, The Movement Challenge, and hosting an event. (The latter two being a bit more accessible for those of us less adept at growing and flaunting facial hair…) Movember is classified as a charity, and they both partner with other foundations and manage their own programs.
Keep an eye on Stash social media [Instagram, Facebook] to see how we are participating in #movember.
Where
Turns out that the USA is the most charitable nation in the world (as percentage of GDP), with New Zealand and Canada coming in 2nd and 3rd.
Within the US in 2015, Utah was ranked by WalletHub as the most charitable state, and Rhode Island was the charitable giving train caboose.
A quick note: these statistics might be comparing charity apples to oranges just a bit. In the US, churches and religious organizations are legally considered charities, which is not always the case in other countries. But while our charity stats might be including our tendency toward tithing, we’re still rocking the charitable giving game.
Why
Besides being a better human being (okay, that’s subjective, but really, did we learn nothing from Scrooge’s transformation?) donating is an intoxicating brew of the impact your donations make and the benefits your donations have to you. These benefits include tax deductions, bonding with your community, and general feelings of wellbeing.
And finally,
How
This can be the most overwhelming part of deciding to make a charitable donation. Now that you know exactly what a charitable donation is (unless you’re reading out of order, in that case: kudos to you, you rebel! That info is back up at the top, where most of us start reading), here are a couple of handy tools that can help you ensure that your hard earned dollars are going where you want ‘em to go!
Recommended Reading: Nonprofits: How do you know if they’re legit?
#1 IRS Select Check Tool
This tool allows you to check if the organization to which you’re about to donate is actually registered as a nonprofit. If they aren’t, you won’t be able to claim the deductions. <img src="https://s.w.org/images/core/emoji/72x72/1f629.png" alt="