Season of Giving: Wise Charitable Decisions

I celebrate my friendships and family at this time of year! I love to choose gifts that I think will make them happy, and I'm thankful that I can afford to shop without worrying about each dollar. While I'm celebrating, however, I'm very aware that for many times are tough. Part of my giving each year is to organizations that help others; sharing is part of money management, in my opinion.

People tend to help each other. I'm always struck when examining data from the Consumer Expenditure Survey (yes, I'm enough of a money geek that I do find this fascinating!) to see that the amount people share with others equals approximately 3% of their annual expenditures. In fact, it's amazingly similar across income categories, the amount spent on cash contributions* ranges from 2.8% at the lowest income category (below $15,000) to 3.2% for those making up to $200,00. (It increases more at the higher income levels.)

December is a common time for people to make extra charitable donations. You want to be sure that your dollars go to legitimate charities. Take precautions to make sure your donation benefits the people and organizations you want to help.

You need to be especially careful when a charity calls or send you mail requesting money. Here are some tips to help you:

  • Get the exact name of the organization and do some research. Searching the name of the organization online — especially with the word "complaint(s)" or "scam"— is one way to learn about its reputation.
  • If a donation request comes from a group claiming to help your local community (for example, local police or firefighters), ask the local agency if they have heard of the group and are getting financial support.
  • Check if the charity is trustworthy by contacting organizations like the Better Business Bureau's (BBB) Wise Giving Alliance or Charity Navigator.
  • Never send cash donations. For security and tax purposes, it's best to pay by check (made payable to the charity) or by credit card.
  • Never wire money to someone claiming to be a charity. Scammers often request donations to be wired because wiring money is like sending cash: once you send it, you can't get it back.
  • Do not provide your credit or check card number, bank account number or any personal information until you've thoroughly researched the charity. Don't give this information if they've called you!
  • Be wary of charities that spring up too suddenly in response to current events and natural disasters. Even if they are legitimate, they probably don't have the infrastructure to get the donations to the affected area or people.

Charitable deductions may be tax deductive if you file a Form 1040, Schedule A. For more information, see the IRS Tax Topic "Charitable Contributions."

When we're talking about financial management, we're usually talking about saving or borrowing money. The holiday season is good time to remember that sharing is a piece of our financial decision-making. Happy Holidays!


* Cash contributions includes cash contributed to persons or organizations outside the consumer unit, including alimony and child support payments; care of students away from home; and contributions to religious, educational, charitable, or political organizations, as defined by the Bureau of Labor Statistics.