Racking your brain for gift ideas? Break tradition this year
by giving your loved ones the opportunity to protect their favorite endangered
species, supported local artists or help fund an international opera through
charity gift cards.
These cards look like traditional gift cards, but work a
little differently. Nonprofit organizations offer these cards and the giver can
choose an amount that can range from $10 to $5,000 or more. The gift card is
sent by mail, printed out or emailed, and then the recipient gets to pick a
charity from a pre-selected list and the money is sent to that group.
Our survey found most card providers charge a flat fee for a plastic card, ranging from 50 cents to $5, plus a percentage for processing, ranging from 3 to 8 percent (Network for Good charges a flat fee of $5 and no percentage, while GlobalGiving charges 15 percent and no fee). These
fees cover the cost of the card and processing. Depending on the amount of
the gift card, these fees can eat up anywhere from a little over 3 percent of
the total to a whopping 50 percent or more.
Despite the sometimes-hefty fees, experts say these cards can make good holiday gifts.
Charity gift cards also provide a way to make the gift of a charitable donation more tangible, says Charlene Davis, an associate professor
of marketing who does research on charitable giving at Trinity University in Texas.
Wrapping and presenting charity gift cards can feel more substantial than just notifying recipients that donations were made in their names, she says.
"It's a good alternative to the gift of stuff," says Jon
Siegel, executive director of TisBest Philanthropy, an organization that offers
charity gift cards.
Charity gift cards: The pros
Charity gift cards offer benefits to the giver, the receiver
and the charitable organization, backers say. Here are four pluses of
Give and you shall receive a tax break.
When you buy a charity gift card, your purchase is considered a donation to
charity, so you typically get a letter or a receipt that you can file away
until tax time. Usually the person who purchases the gift, not the recipient,
can take the tax deduction, says Sandra Miniutti, vice president of marketing
for Charity Navigator, an independent charity evaluator.
The recipient gets to allocate the money.
"The recipient gets to choose which cause is most important to him or her,"
Siegel says. Even your friends and relatives might have preferences or beliefs
you don't know about, Siegel says. "Someone might be really enthusiastic about
charity X, Y or Z," he says. Yet, they might not care as much about, or might
even oppose, another cause.
You can personalize the gift. Most
organizations offering charity gift cards will, at a minimum, allow you to
choose from several card designs. And others let you upload your own artwork or
photo to make the card even more personal. "Being able to tailor it with your
own design makes it seems a little more thoughtful," Davis says.
The recipient might have to do less
pre-donation legwork. You should always do your homework before donating to
a charity, Miniutti says. But that might be a little easier for card recipients
because some organizations that offer charity gift cards research nonprofits
before including them in their lists, she says. For example, TisBest
Philanthropy reviews each charity's 990 form, the tax return filed each year
with the IRS, which gives information about CEO pay and the amount of money
spent on programs. TisBest also checks information from evaluators such as Charity
Navigator and GuideStar. "Some of these organizations do a little bit of
screening on the front end," Miniutti says.
charity gift cards
Charitable gift cards can have some downsides, others note. Before
pulling out your credit card, consider these three cons:
Not all of the
money goes to charity. If you donate directly to a nonprofit organization
in a loved one's name, 100 percent of the funds go to the good cause. That's
not the case with charity gift cards, where a middleman skims fees off the top.
There's typically a plastic card fee, which covers the cost of the card itself
plus postage and handling, plus an additional percentage for administrative
costs and credit card processing. Those fees add up, and can take some of the
joy out of giving, experts say. "The fee issue is a significant one," Davis
says. "That's true for any gift card, but it rubs even more when it's a
Some cards expire.
It's inevitable: In the flurry of holiday activity, people sometimes misplace
or forget about their gift cards. So, what if your recipient stashes the gift
card in a drawer and finds it in a year? With some cards, it might be too late
to donate that money to a good cause. Before you buy a card, you should also
check to see if there's an expiration date, experts say. "Some cards have a
relatively short shelf life, a year or less," Davis says.
You probably can't
snag one in the checkout line. If you need a last-minute gift for that ugly
holiday sweater party, it's hard to beat the convenience of running into a
store to grab a gift card. But charitable gift cards are not as widely available
as other gift cards, so consumers have to actively seek them out and buy them
ahead of time online if they want plastic to wrap, Davis says. She says
nonprofit organizations haven't pushed these cards as much as she had
anticipated they would when the cards first came out several years ago. "Every
other kind of gift card is so easy to get your hands on," she says. "You can go
to any grocery store, drug store or convenience store."
Read the fine print
So, how do you make smart choices when it comes to charity
First, read the terms and conditions closely, experts warn.
"People purchasing charity gift cards need to make sure they understand all the
costs involved," Miniutti says. Davis recommends looking at both the grand
total of the fees and the amount you plan to spend. A $5 flat fee might seem
reasonable if you're buying a $100 gift card, but could be a reason to nix your
purchase if you were only planning to spend $10, she says.
In fact, the CreditCards.com survey found that, in order to
see which provider will offer you the best deal, you have to crunch the numbers
based on the amount you plan to spend. For example:
$10 gift card: CharityChoice is cheapest at $1.30, while GlobalGiving
comes in second at $1.50. The Good Card, which charges a flat fee of $5,
takes half of your money, and the Gift of Giving card, at $5.25, eats up
more than 50 percent of your gift. For a
$50 gift card: CharityChoice again is least expensive at $4.50. TisBest comes
in second at $4.94. On the high end, a Gift of Giving card costs $6.45,
while a GlobalGiving card rings up at $7.50. For a $200 gift card: the Good Card, with its $5 flat fee is the best
deal. TisBest comes in a distant second at $9.44. The second-most expensive
card, CharityChoice, charges $16.50, while GlobalGiving pockets a hefty $30
In addition to looking closely at fees, it's important to find
out if the card has an expiration date. At the very least, you should know the
expiration date when you give the gift, she says: "That way, you can encourage
[the recipient] to use it sooner rather than later."
It's a good idea to look at the list of
charities from which your recipient will be able to choose. One organization
that sells gift cards might have a list of just a few hundred charities, while
another might have thousands of groups that can receive donations by gift
Some charity gift card groups focus on large, national
charities while others include many local organizations. Others, such as GlobalGiving,
have an ever-changing list of "projects" all over the world. For example, a
recipient could choose to feed an orphaned chimpanzee in the Republic of Congo,
send a 5-year-old to school for a year in Haiti or help a
youth jump-roping team get to a big competition in Kenya.
Each project lists a total amount needed and total amount
raised, while some projects tell what donations of various amounts could do.
For example, $50 would buy 180 pounds of bananas for the chimps, while $30
would pay for transportation for the jump-rope team.
This type of specificity can really appeal to a gift card
recipient, Davis says, because many people who give to charity like to see
exactly how their donation is making a difference. She says: "Then they get to
not only choose the charity, but narrow it down to a specific project that is
near and dear to their heart."
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