Tis the season....

The season of giving is upon us. Since the election the markets have provided a nice bump.  Not all investments are up, but the general consensus seems to be fairly positive for the economy and the markets going forward. However, I want to take a few moments to focus on giving. Year-end is a perfect time to support a local charity or cause.  I, for one, like to support local charities, but to each their own.      

Whether we’re buying a personal item or investing in stocks, we try to achieve the best return for our expenditures. Some of us aren’t as careful when it comes to charitable giving. With more than a million public charities in the United States and an ever-flowing stream of appeals, it’s easy to react emotionally to those that move us. But to have the greatest impact, we need to use our heads as well as our hearts. So here are a few tips for becoming a discriminating giver.

While diversification is usually a smart strategy for portfolios, the opposite is true for philanthropy. Concentrating on causes you care about most makes it easier to evaluate organizations’ effectiveness, achieve substantive change and avoid being inundated with subsequent solicitations.

You can look for a prospective charity on the three major charity watchdog sites: charitynavigator.org, charitywatch.org and give.org. These sites reveal how organizations spend money, protect donor privacy and govern themselves. To provide a measuring stick, Charity Navigator’s data shows nine out of 10 effective charities spend at least 65 percent of their budgets on the programs and services they provide. You can also read a nonprofit’s annual report, audited financial statement and IRS Form 990, which will show salaries of the highest paid employees. But bear in mind, $150,000 is a typical salary for a talented leader of a multi-million dollar organization.¹ 

Make your donations stretch further by seeing if there is a matching program through your employer or a generous donor. And give directly; professional fundraisers often keep 40 to 80 percent of the donations they take in.

To achieve tax advantages, verify the organization is a 501(c)(3) tax-exempt entity by asking for a copy of its IRS determination letter. Be sure to keep a bank record, credit card statement or receipt along with the date of your donation for tax records. Remember, contributions are deductible in the year you mail a check or charge a credit card.

Hopefully you will spend some time enjoying the upcoming holidays. As Lou Holtz once said, “always have four things in life: Something to do. Someone to love. Something to hope for. Someone to believe in.”

Happy Holidays and until next time…

Darin

PS:  We have added a new ‘Market Commentary’ section to our website.  A new market commentary will be posted to this section each week.  Check it out….

 (We do not provide tax advice; coordinate with your tax advisor regarding your specific situation.)

¹“Top 10 Best Practices of Savvy Donors,” www.charitynavigator.org/index.cfm