Tips to Help Maximize Your Charitable Donations

Every holiday season, requests for charitable donations tug at our heartstrings. And in a year like 2020 where there’s no shortage of organizations that need help, you may be more compelled than ever to give toward a cause.

“There are so many pressing issues — all of them worthwhile — so you want to make sure the cause aligns with your passions and values,” says Kevin Scally, chief relationship officer at Charity Navigator. “Giving is incredibly personal, so choose an issue where you feel a connection.”

“Giving is incredibly personal, so choose an issue where you feel a connection.”

But before you write that check, here are some questions to ask to ensure you maximize your charitable donations to make the most impact.

HOW DO I KNOW IF A CHARITY IS LEGITIMATE?

“Giving should be intentional, rather than an impulse reaction,” Scally says. “Give yourself time to adequately investigate the organization or cause to which you’re donating.”

That starts with evaluating a charity and confirming that it's legitimate. Charity Navigator allows you to search by topic or issue and offers lists of both larger organizations and those making an impact on a local level. GiveWell compiles an annual short list of groups it deems to be the most efficient by calculating the impact per dollar. You can also research and compare different groups on sites like CharityWatch and GuideStar.

It’s also a good idea to consult the organization’s official website to find their annual report, along with its Form 990, which every charity must file annually with the IRS. While GoFundMe campaigns and other peer-to-peer donation requests you receive may very well be valid, bear in mind that they won’t offer the same oversight that a legally organized charity will.

SHOULD I GIVE LOCALLY OR NATIONALLY?

With causes to support both across the world and down the street, the decision is personal for each giver. While a contribution to a local charity can potentially make more of an immediate impact, national charities often have larger infrastructures and established relationships that can help make the organization more effective.

If you decide to contribute to a larger charity, see if they’d be able to funnel your gift to a local chapter. For example, if you’d prefer your donation go toward hurricane relief in your area, check that the group is transparent about whether the money can go to a dedicated local fund rather than being used by the organization at large, Scally says.

SHOULD I CONCENTRATE MY DOLLARS OR SPREAD THEM OUT?

With so many worthwhile organizations, you might be interested in giving a smaller gift to multiple groups, rather than give one or two larger donations. But dispersing your money might not be as effective.

“Regardless of size, each donation requires a certain amount of ‘person power’ to process and acknowledge it,” Scally says. And once you’ve made a gift, the organization will likely add you to its mailing list, which costs them additional money as they work to connect with you. “It can be better to choose fewer charities and create a connection and long-term partnership, rather than sprinkling money around impulsively,” Scally says.

Once you know which nonprofits you want to support, one thing Scally does recommend you spread out is your donation. For instance, rather than give $250 at once, consider donating $21 a month over the course of the year. Not only does it help you fit charitable giving into your regular budget, the charity benefits because it helps them better forecast their internal budgets. “Plus, you’ll feel good all year,” Scally adds.

A NOTE ABOUT GIVING AND TAXES IN 2020

In a typical year, you’d only be able to write off your charitable donations if you decide to itemize your deductions. But thanks to the federal Coronavirus Aid, Relief, and Economic Security Act, you can deduct up to $300 in cash gifts to qualifying nonprofits on your 2020 tax return without having to itemize.

And if you are planning to itemize, you can deduct qualified charitable cash contributions up to 100 percent of your adjusted gross income — an increase from the 60 percent that is usually allowed.