The year is drawing to a close, but The Motley Fool's annual Foolanthropy campaign is still in full swing. We've already outlined how together we can help cost-effectively transform thousands of women's lives and realize maximized outcomes for giving dollars through this year's partner, Fistula Foundation. (Visit the donation site here.) But there's yet another great reason to give: tax benefits. The IRS has provided an attractive route to give to others and even get a little something back, too.
A big, benevolent bang for your buck
As charitable donors choose qualified tax-exempt organizations and itemize deductions when they file their taxes, their contributions lessen their annual tax bills.
Here's another way to view one's philanthropic spending: When all is said and done with your taxes, the tax savings mean that the "cost" of a tax-deductible charitable contribution is actually less than face value -- a pretty big bang for the buck, no matter how you slice it.
The beneficial levels differ according to one's tax bracket. For example, for those in the 15% tax bracket, a $100 donation costs $85 after factoring in the tax benefit received. For wealthier individuals in the 35% tax bracket, a $100 donation in effect runs them $65. In other words, these rules mean good deeds add up to a good deal for the philanthropically inclined.
If the joy of giving and receiving some favorable tax outcomes gets you fired up to donate, don't forget a few important notes.
Always remember that to receive philanthropy-related tax benefits, you must donate to a qualified organization. Fistula Foundation fits the bill, of course, and we've vetted and revealed many of its benefits already; if you're pondering other organizations, you can check out others at the IRS Select Check site.
Any $250-plus donation requires written acknowledgment from the organization -- that's so you're ready if the IRS has any questions about your tax return after it's filed. Along those lines, make sure you have receipts, including for cash donations.
Last but not least, don't give up on 2015 giving even though we're in the final days of the year. If you want your donation to count for this past year's taxes, donating instantly by credit card will count up through Dec. 31, even though you won't pay off the donated amount until 2016. A check popped in the mail and postmarked by Dec. 31 also works.
Stock up on giving
Here's an even more sophisticated and savvy way to give to charity, and one that, of course, goes hand in hand with our investing mind-set here at The Motley Fool: donating stock -- and avoiding some capital gains taxes.
If your portfolio includes some stocks with unrealized gains, you can always opt to donate such appreciated stocks to your chosen charity instead of simply sending cash. One important caveat to remember is that you will have had to have held the shares you're donating for one year to receive the favorable tax treatment.
Because you don't sell the stock first and instead give shares directly to the charity of your choice, you not only avoid capital gains taxes but you can also take a deduction for the full market value of the securities when you make the donation.
If you're interested in donating stock and have further questions, you can contact us at Foolanthropy2015_questions@Fool.com.
Give the gift of new hope in the New Year
Once again, as you consider tax benefits of charitable giving before year's end, consider Fistula Foundation and the $450 surgeries that can restore thousands of women's lives.
As of this writing, we're more than halfway to our $75,000 goal -- and if we make our $100,000 stretch goal, The Motley Fool will kick in an additional $2,500 to Fistula Foundation. Visit the fundraising site here.
With your help, the new year can herald new hope for thousands more women suffering from obstetric fistula.