What You Need to Know About Charitable Gifting

It’s the most wonderful time of the year and everyone around me is in the giving spirit! If you’re looking at donating this season, it’s important for you to research the organizations that you’d like to help. I’ve come up with a few things to check, before you write the check.

The first step is simple. Go to the Internal Revenue Service (IRS) website and find the Tax Exempt Organization search. Use the EIN or company name to ensure the organization is a valid charity with a 501(c)3 status. While using the same search function, take time to pull up the company’s tax Form 990 and compare financials with other charitable organizations in the same category. For example, review expenses to see how the charity spends their donations or if the wages for top employees align with the average. Comparing benchmarks can give you a good idea of how efficient the organization is running and where the money is really going.

Next, visit the company's website and search for their annual report. These reports offer engaging graphics with the organization’s mission statement, progress on future fundraising initiatives, and outcomes from past events. In addition, the report often includes top contributors and a list of the board of directors. By reviewing the annual reports, you are able to see if the organization is a good fit.

As you went through your selection process, you probably were drawn to a foundation because it aligned with your aspirations. To ensure your intent is recognized, you should decide if you want your contribution to be unrestricted or restricted. Restricted funds are donations made and earmarked for a specific purpose by the donor - meaning your money goes where you want it to go.

Now that you have done your research, it’s time to give. Remember, donating to a charitable organization isn’t all about the money - you can donate securities out of your portfolio too. If you need some help navigating tax advantaged gifting, book your appointment with KJ Dykema, MRFC® and we can help design a plan with your values in mind.