Spending

How to maximize your charitable donations this holiday season

Twenty/20

The Salvation Army bell ringers are in full swing, and so is the global movement to donate and do good known as #GivingTuesday. The season of generosity is here.

In 2018, individual giving totaled an estimated $292 billion, according to Giving USA's 2019 report. And though people give year-round, 31% of annual giving occurs in the month of December, according to The Network for Good's Digital Giving Index.

It can feel good to donate to a cause that's close to your heart. But before you do, make sure your money is going to fund the programs or help the people you want it to. That means doing your research on your charities of choice before you donate, says Ashley Post, a spokesperson for Charity Navigator.

"This time of year, people are more likely to take advantage of people's goodwill and generosity," says Post. Here are three ways to make sure your donation counts, as well as some suggestions for creative ways to give.

1. Check the charity's EIN

To sidestep scams or frauds, check the EIN (Employer Identification Number) of any organization asking for funds before you donate to it. Every organization that has been recognized as a tax-exempt nonprofit should have one, explains Post, and you can look up a particular EIN on Charity Navigator or in the IRS database.

"It's a great way to confirm it's legitimate and gifts are tax-exempt," says Post.

Many charities list their EINs on their "donate" pages, so they're easy to find if you're donating online. If a fundraiser calls you asking for a donation over the phone and you can't check the charity's EIN immediately, ask about the organization's mission, goals, and achievements. If the fundraiser is unable to answer those questions, then you probably shouldn't donate, says Post.

2. Review the charity's rating

Checking a charity's rating can give you a clearer understanding of how your donation could be spent. While you can dig into a specific charity yourself, charity watchdog organizations like Charity Navigator, Charity Watch, and GiveWell collect data and crunch the numbers to help donors make informed decisions, based on a charity's tax returns, annual reports, accountability, and transparency.

When doing your research, find out how much of overall revenue is being spent on programs. The general rule is that a charity should spend at least 70% of its revenue on programs, with 10%-30% going to administrative costs and fundraising, explains Post.

On Charity Navigator, for example, any organization that receives the highest rating of four stars is exceeding industry standards, which means it's spending 70% or more of revenue on programs.

3. Be clear about the kind of support you want to offer

If there's a particular program that you think is worthy of your support, you can make a designated gift by, for example, writing a note on your donation specifying where you want the funds to go. That's pretty common after a disaster, says Post. After the wildfires in California, some people who donated to national relief agencies specified that they wanted their funds to help those affected or displaced by the wildfires.

You can also simply give general operating support and trust that the charity knows the best way to spend it, says Post. "It allows them to be pretty nimble and adapt to changing needs. It might not be as rewarding," she acknowledges, but "they could use it to keep the lights on or buy copier paper, [and] those are legitimate needs that keep the charity running."

Trust in the process, says Post: "The best thing is to feel confident about the charity you've chosen to support, and know that if you've done your due diligence, they know the best way to spend your donation."

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Find creative ways to give

If you don't have the financial means to give to a charity this holiday season, there are other ways to donate. For starters, "volunteering is always a great way to give your time and talents to an organization in your community," says Post.

Consider offering necessary items such as food, clothes, or bedding to a food bank or shelter, she says. Or try selling unused items around your house that are still in good condition to bring in extra cash that you can then donate.

Even if you're short on cash, there are creative ways to give. First, try putting your spare change to good use. Food delivery apps Grubhub and Seamless let you round up your bill to help feed the hungry, and ride-sharing app Lyft has a similar Round Up & Donate feature.

You can also use social media for good: Instagram, for example, has a charitable giving tool, which allows you to encourage your friends to donate to an eligible nonprofit by raising money right from the application.

As for where to give, as long as you've checked the charity's credentials, there's no one right place to donate.

"I think it's what aligns most closely with your values," says Post. "If [an issue] is on your mind and in your heart, and you know they're facing a particular challenge, it might be time to support."

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