According to Giving USA, Americans gave more than $298.42 billion in 2011 to charities. My investment approach toward charitable giving makes sure my charitable funds reach the most needy and worthy receipients. Besides cash contributions, I also try to be charitable without spending a great deal of money out of pocket.
Although cash donations increased in 2011 despite tough economic conditions, sustained high employment, natural disasters like Hurricane Sandy and a dire fiscal outlook likely mean many Americans, myself included, have to move more of my charity to non cash contributions, despite the advantages of cash contributions to charity ahead of the fiscal cliff. Here is how I have given to charity without spending a dollar out of my pocket.
Donate clothes and household itemsWith a baby at home, clothes that are like new get outgrown fast. Every season, I donate bags of children's clothes to local charities. IRS allows for tax write off of gently used clothing, and qualified charities provide a receipt, although it is up to the donor to assign value to the donation. Business clothing can be donated to charities like Dress for Success and local thrift stores, like Goodwill and Salvation Army will accept clothing, household items and furniture. My tax software calculates the fair value of non cash donations of clothing and household items.
Canned goods are welcome at most homeless shelters and food banks, such as Food Bank for New York. Recently, I received a coupon for a free 20 pound turkey from my grocery store. I was not hosting Thanksgiving dinner, so redeeming the coupon was out of the question. I donated the turkey to our local homeless shelter, essentially cashing out my free coupon without paying anything out of pocket. Cash register receipts can serve as proof of value for charitable deductions.
When I was a college student and did not have money, I voluteered to teach English as a second language at the Queens Public Library. During my maternity break, I published a non for profit's newsletter. There are several opportunities for homework help for inner city kids at organizations such as Big Brother, Big Sister. Working for free is a great way to get fullfilment, and also keep professional skills and key competencies sharp. Volunteering time is not tax deductible, but miles traveled for charitable work is deductible.
Donate airline miles or credit card pointsMost airlines and credit cards allow reward points or miles to be donated. Some even offer bonuses for donating at year end. Although it is difficult to claim a tax deduction (I like to have receipts even for donations under $250), a tax accountant may be able to help claim such donations if they are substantial. Travel review site Fodors has a list of many hotel and airlines that allow for miles and reward point donations.
Auction off gifts
eBay has an option of donating part of selling price for items on its auction site. Rather than regifting, I sometimes sell unused gifts that cannot be donated outright on eBay, and directly donate the proceeds. eBay does not collect final value fees on charitable donations, per its ebay Giving Works program.
Donate highly appreciated stock
Several charities are set up to accept stock donations. Although it is difficult to part with winning stock picks, highly appreciated publicly traded shares make a great charitable contribution since the donor does not have to pay capital gains tax, yet gets to deduct the full market value, not his basis, on his tax return. Taxpayers with Noncash Charitable Contributions of more than $500 need to fill out Form 8283.
IRS provides the guidelines for charitable contributions in Publication 526.
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- Volunteering & Philanthropy