December is a month to spread good cheer to family and friends. It’s also great time to donate to your favorite charities to keep their programs funded for another year. In addition to helping charities prosper, you could get a tax break. And research shows that giving can actually bring good health to donors, according to the book Science of Giving: An Experimental Approach to the Study of Charity.
Here are four great reasons to share your generosity before January:
1. Fund charities to do more future good deeds. If you’re like most people, you genuinely want to make the world a better place. So whether you feel an affinity to wild elephants, your kids’ elementary school, the local state park, your alma mater, or a religious organization, they will all appreciate whatever donations you can make. Don’t be thwarted by not having millions or thousands to give. Even small donations can go a long way. For example, many local homeless shelters can provide entire meals for under $3 per person. So give now and give what you can.
2. Doing good is good for your health. When research participants gave money, their brains’ pleasure centers lit up, illustrating how giving actually improves our body chemistry. Jorge Moll and others from the National Institutes of Health found that when we make charitable donations, it activates the pleasure regions of the brain. Some researchers even think that altruistic behavior causes our bodies to emit endorphins that give us the good feeling called “helper’s high.”
All this feeling good actually can lead to health benefits. In the book Why Good Things Happen to Good People, Stephen Prost reports that donating has been shown to increase health benefits in people with chronic illnesses such as HIV and M.S. Donating may actually improve physical health and longevity because it can help reduce stress, which has long been linked to health problems.
3. Tax benefits. Donating now can also ensure that you have enough tax deductions for 2017. Note that donations made before December 31, 2017 count toward the 2017 tax year, even if the charge isn’t made until 2018. Getting a tax deduction because you’ve made charitable donation means that your taxable income will be reduced in 2017. The rules around how much to deduct change depending on income level, donation amount, and other variables. Check in with the IRS or your accountant about how much you’ll be able to claim for the donation.
4. Employer donation matches make your gift go farther. Many employers match a certain percentage of monetary gifts given by employees to the nonprofit of the employee’s choice. Ask your human resources department about an employee gift match. Also some larger giving organizations offer matches on a special day of the year. Do a Google search on your state and “giving day match” for more information. Or ask your designated charity if they know of any matching programs to help transform your gift into an even larger contribution.
Four Tips for Year-End Charitable Donations
Now that you’ve decided to hit the “Donate Now” button on your favorite charity’s website, the following are four things to keep in mind.
1. Find the right charity for your year-end donation. Decide what is important to you and what the best charities to continue that good work are. Some families choose one favorite charity. Others divide up their donations into smaller gifts to many charities. Ask yourself what the most important issue is that you’d like to improve for generations to come?
2. Do research on the legitimacy of the charity. Before making donations, be sure the charities you choose qualify for tax-exempt deductions. Use the IRS Select Check tool. Note that churches, synagogues, temples, mosques, and government agencies are eligible for tax-deductible donations, even if not listed in the IRS database. This database merely lists nonprofit organizations that are in good standing with the IRS. For more detailed reporting about larger charitable organizations visit Charity Watch. Or to find details about smaller nonprofits, visit Charity Navigator or Give.Org.
If your favorite charity isn’t listed on these watchdog websites, you can always request their financial reports or find them online. Pay attention to how much money is going toward overhead versus actual programs. One good rule of thumb is to donate only to charities that use two-thirds or more toward programs.
3. Avoid charitable giving scams. Never give a gift to an organization with which you didn't initiate the contact – whether in person, on the phone, or through email. If you're giving online, make sure that you see the “https” at the beginning of the URL. This means it’s a secure link and your payment data is not compromised. For more information about avoiding scammers, read How to Spot Stranger Scams.
4. Keep records. When tax time arrives, you don’t want to scramble to recall donations and locate receipts. Be sure to create a folder or box in your household (or email) to store receipts and thank you letters. Make note of the organization's name, amount given, and the date of the donation.
Or, you could rely on ItsDeductible, a mobile app that helps you track donations throughout the year so you won’t lose out when it comes time to do your taxes the following year.
Don’t let December slip by without giving to a charity. It can improve your mood, make the world a better place, and have a positive impact on your tax bill.
Things to Consider
- Giving to charity is actually good for your health.
- Keep records of donations throughout the year so you reap the tax deduction the following year at tax time.
- Research your favorite charities and matching situations to maximize your contribution.
Neither Transamerica nor its agents or representatives may provide tax, investment or legal advice. Anyone to whom this material is promoted, marketed, or recommended should consult with and rely on their own independent tax and legal advisors and financial professional regarding their particular situation and the concepts presented herein.