Have a Plan in Your Charitable Giving

As we move into the holiday season, Americans are being called upon to donate to a variety of philanthropic causes and nonprofit organizations. While charitable giving is a year-round consideration for many, holiday charity appeals and the desire to receive year-end tax deductions make it top of mind at this time of year. According to the Blackbaud Index, which tracks $20 billion in U.S.-based charitable giving, 34% of all donations are made in the last three months of the year and roughly 18% are given in December alone. What's more, a large percentage of charities depend upon a generous holiday season for a significant portion of their annual fundraising. Although you may have traditionally done the bulk of your charity giving at the end of the year, we'd like to encourage you to do things differently. Much as with open enrollment season, it's advisable to plan ahead with your charitable giving instead of leaving it as an afterthought for the year's end. This article outlines why allocating your resources throughout the year is a better way to go, as well as gives tips for selecting the beneficiaries of your charity dollars.

Charities Need Donations All Year Long

While many givers only think to donate to philanthropic causes around the holidays, charities need resources to facilitate their operations all 12 months of the year. They often find it difficult to plan for their yearly needs and allocate proper funds for outreach when the bulk of their donations comes in at the end of the year. In addition, when charities are inundated with donations during the short holiday time window, they may have to contend with resource allocation issues. For example, a food bank may receive so many boxes and cans of food that it doesn't have space to store them all, which can result in waste and missed opportunities to feed those in need.

To help mitigate donors' tendency to give mostly or solely during the holidays, some nonprofit organizations have shifted their fiscal year-ends from December to an earlier month, such as September. This change enables them to better budget their holiday donations throughout the year to cover key services. Donors can also benefit from changing the way they manage their charitable donations. Contributing year-round instead of only at holiday time can help you better budget your finances and prevent you from falling short at the end of the year.

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How to Choose the Charities to Give to

Even if you're resolute in your desire to donate to charity—at holiday time or throughout the year—you may wonder how to decide which charities should receive your donations. Here are some suggestions to help make the selection process easier for you:

Consider your passions: Take a few minutes to think about the causes you're passionate about. Do you want to help children, senior citizens, animals, the environment or a religious organization? Or would you like to contribute toward the research and treatment of a disease that has affected your life or the lives of your loved ones? Think about the causes you'd like to champion this year. You can always shift your focus next year or beyond.

Narrow the field and think outside the box: Within your top one or two areas of interest, select a small number of charities to support. It's better to give to three or four charities generously than to 10 organizations nominally. It's also a good idea to support less popular charities, perhaps those that are community-oriented, as such groups generally have a harder time meeting their donation goals. While a national cancer charity may have no problem raising money, for example, a local hospital may be struggling to raise funds for its new cancer wing and would really appreciate your contribution.

If you would like guidance on selecting reputable charities, here are a few websites that can help:

  • The Greater Cincinnati Foundation: If you want to focus your charitable giving locally, the GCF Community Funds are an excellent place to start. These funds are organized around seven of the Cincinnati area's greatest needs, including cultural vibrancy, economic opportunity and educational success.
  • Charity Navigator: This is the country's largest and most utilized evaluator of charities. Charity Navigator's rating system examines the financial health, accountability and transparency of each evaluated organization. You can search charities by name or browse 11 key interest categories.
  • CharityWatch: The groups included on CharityWatch's top-rated list generally spend 75% or more of their budgets on programs and have met key governance benchmarks. Top-ranked organizations are listed within 35-plus interest classifications, and each group is given a letter grade.

Once you're clear on the charities you're going to contribute to, it's a lot easier to turn down any additional donation requests you receive. You can simply state, “I'm sorry, but that's not one of the causes I'm supporting this year.”

Decide how much and how to give: The average American gives about 3.1 percent of his or her pre-tax income to charity, and the average household donates $1,620 each year. Of course, how much to give is a very individual consideration and can vary over time and based upon life circumstances. Charity Navigator offers a simple calculator that uses your federal income tax bracket to help you decide the best charitable giving amount for you.

In terms of the logistics of making charitable contributions, many organizations are now set up to accept monthly donations. You can sign up to have your desired donation amount processed each month via an automatic checking account deduction or credit card payment. This helps with your monthly budgeting while assisting charities in planning for their revenue. With automated donations, charities know how much will come in from donors each month, so they won't be caught short in funding their operations and outreach.

We hope we've convinced you of the value of creating a plan for your charitable giving. As 2016 draws to a close and you're writing out your holiday donation checks, we encourage you to take some time to think about what your plan is going to be for 2017. Allocating a short period of time now for these considerations will enable you to begin next year powerfully and help make your charitable giving more focused and impactful.