Giving Is Good for the Soul: How to Donate Money to Charity

donate money to charity

Giving charitably can have a big impact, but the careless mistakes we make when donating really reduce that impact.

According to Reuters, we’re throwing away billions of dollars simply because we don’t know how to donate well.

Before you’re ready to give, review this information and learn how to effectively donate money to charity.

How to Conduct Your Research

We care a great deal about our own financial habits, and we should expect the same of our charities. Before donating anything, it’s important to do research. Here’s what you’re looking for:

  • The charity is real
  • You know where your money is going
  • Your donation will be tax deductible

Identifying Legitimacy

Scams and illegitimate charities do exist. Never donate to a charity without verifying its legitimacy. You’re basically looking for a second or third source to confirm that the charity isn’t a scam.

There are various institutions that exist for the purpose of identifying legitimate charities and reviewing their operations. 

Reviewing the Charity’s Operations

You can start your research by searching for organizations whose causes you’re passionate about, or you feel will have the most impact, or that just pique your interest.

Then you may want to check with a charity watchdog, like BBB Wise Giving Alliance, Charity Navigator, or CharityWatch. They rate charities based on things like their transparency and responsible financial management.

Some organizations have developed a bad reputation for things like ineffectively using their funds and overspending on administrative costs. You want to make sure your donation is being used efficiently. 

The attorney general in your state may license charities. Their office may provide information on the complaints they have received. Also, the Better Business Bureau reviews the operations of large charities and posts their reports online. 

Tax Deduction Eligibility 

In order for your donation to be tax deductible, the charity must have 501(c)3 status. You may see their status listed on their website, or check with the IRS database for tax-exempt organizations.  

Making Monetary Donations

Whether you’ve recently won the lottery or you’re considering starting to donate a sensible portion of your income, there are a number of options for large and small contributions. Simply write a check to the charity of your choice, visit their website to pay online, or try one of these other popular options.

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Donor-Advised Funds

When you make your first donation, a fund is set up in your name. You can then add to that fund periodically, at your own discretion. The money you donate remains in your fund until you have decided to transfer it to a charity.

A donor-advised fund offers many advantages. These include:

  • The organization you open the fund with will manage the money, invest, and grow your fund’s value over time
  • All charities available are fully vetted for you
  • Your donations are guaranteed to qualify for tax-exempt status 
  • Since your money is donated through the fund, your information isn’t received by the charity, so you won’t be contacted or receive junk mail
  • Your contributions to the fund can also take the form of stocks, real estate, and other assets

If you do want to set up a donor-advised fund, be aware of the minimum contribution requirements of the organization you’re considering. Some popular organizations will require somewhere between $5,000 and $25,000 as the minimum balance requirement to open a fund.

Crowdfunding for Charitable Giving

Crowdfunding for charities is growing in popularity as younger people give almost exclusively online.

There are many sites dedicated to crowdfunding for charities. It’s advantageous because a number of small contributions can add up to a significant sum, quickly. This makes it especially attractive to smaller, less recognizable charities. 

Since crowdfunding attracts many different charities to the same place, you don’t have to conduct a great deal of research on your own to find charities to donate to.

You can expect the crowdfunding site to conduct some level of vetting, but you may want to review the site yourself to be certain.

Many of these sites will allow you to create your own personalized fundraising campaign that other users can contribute to. So volunteers can also use these sites to conduct their own peer-to-peer fundraising efforts. 

Peer-to-peer is a method of fundraising where many individuals donate their time to the charity by making their own efforts to fundraise on the charity’s behalf.  

Establish Your Own Private or Family Foundation

Some donors with a high-value net worth might be interested in setting up their own foundation. You may see a need that doesn’t get the kind of attention it should, or isn’t being addressed effectively.

Some foundations are very well known, like the Rockefeller Foundation or Gates Foundation. Some have a long record of charitable work.

But the fact is that most of the many thousands of foundations that exist are not widely-known and maintain less than $1 million in assets.

If you want to donate a large amount and devote the kind of time and effort that it takes to operate a foundation, you could certainly consider it.

Donating Goods, Personal Property, or Your Time

You can donate used clothing, functioning electronics, and any tools, utensils, and furniture in good condition. Most people will have a Good Will or Salvation Army (or one of their drop boxes) located close by. 

You can donate canned food and other goods to your local food pantry.

You can even donate your used linens at many animal shelters and animal sanctuaries. 

You can also consider donating your time by doing volunteer work. Wherever you’re located, there are organizations doing good work for the public good that would love your help.

Many different well-established charities will accept high-value assets as well. Such as vehicles, real estate property, stock holdings, etc.  

Donate Money to Charity, Help Others and Help Yourself

Get started by using some of these ideas to help you responsibly donate money to charity. And while you’re doing work to help others, make sure to take care of yourself. 

Discover motivating and inspirational ideas to continue doing good work and helping yourself.