What's the best way to donate to charity? Here are a few tips:
- Take the time to think about what causes are most important to you. Then concentrate your giving on those issues. Otherwise, you run the risk of sending a little money this way, and a little money that way, and never really being able to keep up with all the activities you're supporting.
- Get really involved with the organization you're most interested in. You might serve on its board, or volunteer some time working in its office or in the field. If you have some special expertise, such as public relations, marketing, or fundraising, you might offer those services. This is a good way to learn more about the issues, too.
- If you have children, involve them in giving, beginning when they're young. Share with them what you're donating and why, and what your gift will do. Encourage them to develop causes that they care about and that they donate to, as well.
- If you're not yet blessed with riches (and even if you are), consider all the non-monetary gifts you could give. You might volunteer, for example. Or donate things such as used clothing, computers, and cars to charities that can use them. (If you do, make sure to get a receipt for tax purposes.)
- Don't give money to some organization that cold-calls you. Always investigate them first. There are many hucksters out there calling people and wheedling donations out of them. Some shifty outfits beg for donations of cars, too.
- If you end up donating your car to an enterprise that isn't formally tax-exempt (qualifying under IRS section 501(c)(3)), your deduction won't be valid. Look into a charity's legitimacy before giving away your clunker. Also, it's up to you, the donor, to place a value on the vehicle. You want that price to be accurate, so consider looking it up in the Kelly Blue Book at the time of donation. (Look it up many months later, and the vehicle will probably be worth less.) If it's worth more than $500, you'll have to file an additional tax form -- Form 8283. If it's worth more than $5,000, you'll need to include a qualified written appraisal.
- If you donate $250 or more to any charity, you'll need to receive and keep a receipt for tax purposes.
- Keep records of your donations. If you fail to do this, you might end up at year's end totaling donations in your check register and realizing that you gave to some organizations much more often than you thought you did.
- Realize that "tax-exempt" is not the same as "tax-deductible." A tax-exempt organization doesn't have to pay taxes, but donations to it may still not be tax-deductible. You can ask to see a copy of a charity's tax-exemption paperwork, and some proof that deductions are tax-deductible.
Here at The Motley Fool, we've been running our own annual charity drive for the past nine years now. Learn more about Foolanthropy, which will be sponsored by Hilton Family Hotels this year (our very first sponsor!). We select which five charities to support from our readers' suggestions, so start thinking now about which worthy causes you'd like to see us support, and check in come Fall to nominate and donate. Together, we can make a significant difference to some very Foolish (capital F!) charities.