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Women’s guide to charitable giving

Help others while keeping your own finances thriving


The smell of pumpkin spice is in the air and seasonal decor is popping up in windows everywhere – it’s officially holiday season! Holiday season is defined in large part by slowing down, thinking of others and giving time and money to causes and people you care about. A study…

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The smell of pumpkin spice is in the air and seasonal decor is popping up in windows everywhere – it’s officially holiday season! Holiday season is defined in large part by slowing down, thinking of others and giving time and money to causes and people you care about. A study published in 2018 found that 30% of annual giving happens during December alone.

Donating with your dollars is a powerful way to advance causes that are important to you. For many of us, donating is a way to connect with our most deeply held beliefs and to help create the world we want to live in.

Small things add up when it comes to donating. COVID has hit millions of Americans very hard financially, with half of Americans in the four largest cities saying that they have experienced a job loss or wage reduction since March 2020. The financial stress of this year cannot be overstated, but it does mean that many Americans have found themselves in need of charitable support in ways they haven’t before the pandemic.

Why do we give?

Humans are social creatures, and we have both a biological and moral incentive to give and care for others. When we take care of people, we form social bonds, helping ensure that when we need help, someone will be there for us. The act of giving builds community, as well as self-identity.

In the last decade, new studies have shown that giving actually engages the same parts of our brain that other pleasurable experiences do, showing that humans give at least part of the time simply because it makes us feel good. We like to be ‘someone who gives.’

Women, in particular, give in unique ways. A 2019 study showed that women are more likely to give in their working years and to support causes that specifically benefit women and girls. Research also shows that women, more so than men, are motivated to donate time or money when they want to make a difference on an issue. Financial perks such as tax breaks are not as motivating for women donors.

Giving – whether financially, physically or with our time – is also enshrined in the human tradition. Everything from historic preservation societies to organized religions are groups of people who are bonded over the idea that giving of themselves will better their shared beliefs.

Take religious communities for example. Zakat, or charitable giving, is the third pillar of Islam. The Old Testament commands Israelites to give at least 10% of their income to the church. The Torah says that tzedakah (translated as giving) is something that Jews are obligated to do, whether through direct or indirect giving.

Tracie from Baltimore says her religious beliefs play a central role in both how she donates her money and her time.

“My commitment to my Judaism plays a factor in 100% of both my financial giving and the giving of my time. Judaism teaches that we are God’s partners in the work of creation. The world is imperfect as it stands, but we have the power to improve it – the word most often used is repair,” said Tracie.

Budgeting for all levels of giving

No matter why or where you give, you need a financial plan for it. Your first step should be to figure out what kind of giving you’d like to incorporate. Financial giving, like direct donations? In-kind donations, such as donating food? Volunteering, and donating with your time?

Let’s explore some of the ways that you can participate in charitable giving.

In-kind donations

In-kind donations can cover everything from volunteering your time, donating physical goods, and volunteering your specialized services. For those with limited financial means, or with highly specialized skills (like lawyers or accountants), in-kind donations can be as impactful in your community as a monetary donation.

Some affordable in-kind donations are:

  • Socks and personal care items (toothpaste, feminine products and soap) to shelters that serve the unhoused
  • Shelf stable proteins (like tuna, sardine, or beans) to food banks
  • Volunteering in person or remotely to share your specialized insight

Increased tipping on service, delivery

There are also smaller ways to give that can have a big impact. Most waitstaff in the US, for example, make less than $3 an hour at their jobs, and rely on tipping to pay their bills. Planning to increase your tipping for the holiday season can make a huge financial difference to some. This rings especially true in light of the pandemic – delivery workers are working double-time to meet the public need.

Places where you can increase your tips:

  • Restaurants or meal delivery
  • Rideshares
  • Massage therapists
  • Hairstylists
  • Nail technicians

Donating points, miles to charity

You can also put your credit card rewards points to use this time of year! Donating your cash back or flight rewards is an easy way to give without donating cash, thus leaving your budget intact. Your credit card issuer likely has a list of organizations that they partner with for these donations, but you can also directly contact an organization that is meaningful to you to see what their policy is for these donations.

Many credit issuers have introduced COVID-specific initiatives where you can donate your points. American Express, for example, is matching up to $1 million in points donations to Feeding America as part of COVID relief. Your point donation, matched by American Express’ cash donation, has double the impact.

Donating cash to charity

Cash donations are often what charities are looking for because they can be used in myriad ways. It’s easy to make a donation on an organization’s website via the “donate” button, or by calling and giving your credit card info over the phone. You can also mail a check to many organizations.

Cindy Zuniga-Sanchez, an NYC-based financial coach, says that you can make room for cash donations in your monthly budget by starting small and considering your other financial obligations.

“Start by deciding on a set amount or percentage that you would like to give. For example, start small by budgeting to give $30 monthly: $20 to a specific cause or person and $10 for “spontaneous” giving (GoFundMe, etc). During my debt payoff journey, I typically budgeted 6-8% towards giving. Since becoming debt free, I budget 10-15% of my monthly income to giving,” says Cindy.

Start by adding up all your mandatory monthly expenses – like rent, childcare, healthcare, transportation, saving, food and prescriptions. Next list out the “wants” in your life – like Netflix, eating out, shopping or travel.

Then figure out how much you can give, and where you want it to go. Women are more likely to tie donations to personal values than men, so asking yourself what issues you want to see changed in the world gives you a place to direct your money.

You can also ask yourself if you can trade a monthly expense for a donation. For example, if you usually spend $100 on restaurants in a month, can you consider giving up eating out and instead donate that money? With a trade like this, you don’t have to change the total amount you’re spending. Rather, you’re simply changing where you’re spending it. This is an especially handy trick for those of us on a tighter budget.

Another way to maximize your individual gift is to gather a group of friends, family or even co-workers and make a joint donation together. Getting 15 people together to make a donation to the same charity is a way to really help further one organization’s mission.

Cindy does have a warning against making donations with your credit card, however. “Unless you pay off your credit cards in full each month, avoid putting charitable donations on a credit card.  Even though you may certainly mean well, credit card debt accumulates quickly.  It’s best to instead budget for a lower amount and give back to your community in other ways, such as volunteering your time.”

Donating stock to charity

Another form of charitable giving is to donate stocks to charity in lieu of giving cash. Stocks could be a significant gift to an organization, as there is a chance they will appreciate over time.

There is also a tax benefit to donating your stocks, says Atiya S. Brown, a CPA and CFEI at The Savvy Accountant.

“[The] tax benefits to donating appreciating stock is that you save on taxes that would be paid on capital gains. If you are holding shares and you sell them to donate the cash, thinking that is the only way to donate, you would have to pay taxes on the gain before you can donate the full amount of cash.”

Capital gains is a term used to describe when an asset, like stock, gains more value. Capital losses are when an asset loses value.

By donating the stocks instead of selling them and then donating that money, you don’t have to pay the capital gains tax, and you get a tax deduction.

“So, you save on the taxes paid, and you would get the deduction for the full amount of the fair value of the shares as opposed to the cash amount you donate,” explains Atiya.

In order to donate stocks, Atiya says to check websites like Cocatalyst. “They act as the intermediary between you, your broker and the charity. They would work on getting the shares transferred directly without triggering a sale on your end, but rather liquidating on the back end.”

You also might have to contact your brokerage and let them know your plan. Each brokerage may have a unique process to transfer stocks, but most likely you’ll have to fill out a transfer form, let the charity know the date of expected arrival and get a receipt for your personal files. Check with both your brokerage and the charity before you make any arrangements.

You must make the transfer by December 31st for it to count as a 2020 donation, so make sure to give yourself time to get the paperwork done.

Are charitable donations tax-deductible?

Short answer: Yes! You can deduct your donations from your taxes. Long answer: It’s slightly more involved than simply showing a receipt.

Deducting your charitable contributions from your taxes is an especially powerful financial move for those who donate as part of their annual budget. These tax deductions can help ensure that you have the money to keep up your giving each year.

What is the charitable donations tax deduction limit?

Sheneya WIlson is a NY-based CPA and founder of Fola Financial. She shared that while charitable donations are tax-deductible, they only are so if you file taxes in a specific way.

“For individuals, charitable donations are only tax-deductible if you itemize your deductions. Most individuals in the U.S take the standard deduction, which restricts what you can deduct on your tax return.”

The standard deduction is an amount that tax filers can deduct from their income on their annual taxes. The exact amount your standard deduction will be depends on your filing status, income and your age. The IRS has a calculator you can use to determine your standard deduction.

As Sheneya points out, most Americans use the standard deduction on their taxes, as it’s easier than itemizing. If you claim the standard deduction, you’re forfeiting the right to deduct your charitable contributions. It’s worth taking the time to add up your itemized deductions and compare that number to your standard deduction to see which is larger.

Women, in particular, should look to save on taxes, as we know women face an income gap. Saving money on your taxes means more money you can invest in something like your retirement.

Sheneya also shared that there are limits on how much of your giving you can deduct from your taxes.

“Typically the contribution limit for charitable contributions is 60% of the taxpayer’s AGI, a.k.a their adjusted gross income. However, there are certain contributions one can make that are not subject to these limitations. Additionally, due to COVID-19, these limits were also increased for the 2020 tax year,” said Sheneya.

Tax-exempt organizations

“When contributing to charity, you want to make sure that the organization is federally recognized as being tax-exempt. Some organizations may claim to be a charity but have not actually filed for that status with the IRS, which can affect your chances of taking advantage of this deduction,” warned Sheneya.

Before donating money to any charity, you can check the IRS website to use their Tax-Exempt Organization Search tool, which helps you see if the organization has been deemed tax-exempt by the IRS.

It’s important that anyone doing their research also understands that some newer organizations have what is called “fiscal sponsors.” These are already established non-profits that can collect donations on behalf of a new organization. Many new organizations do this as a way to offer donors tax-deductible donations before their IRS approval has come through. If you can’t find the organization you want to give to at the IRS search, check to see if they have a fiscal sponsor that you can look up.

The CARES act also temporarily removed the 60% of AGI limit of 2020 charitable deductions for people who itemize their taxes. This means that more of people’s donations are able to be listed as deductions.

Remember these tax deductions when you are planning out how much you can give. That means if you pay a 10% tax rate, you’ll be able to deduct $.10 for every dollar given on your taxes. Calculating your tax deduction might also help you figure out how much you have to give.

How to offset capital gains taxes with charitable contributions

If you’re looking at your complete financial picture, you might be wondering if donations and deductions tie into your investments at all. Those capital gains taxes, for example, anything we can do about that?

Yes, says Sheneya. Talk to a CPA for help on this one.

“Capital gains increase your net income, while charitable contributions (if you itemize) can reduce it. Since capital gains are taxed differently in the short-term versus the long-term, you should speak to your tax accountant about planning when to cash out on your investments given your current rate of contributing to charity. Ultimately, you would want to take more charitable deductions in the years of which you have higher capital gains and tax liability due,” advises Sheneya.

Capital gains are taxable, but as Sheneya addresses here, the length of time that you’ve had the asset makes a difference in how you’re taxed. Long-term capital gains are taxed at lower rates than your regular income, whereas short term gains (defined as gains made on an asset held for less than a year) are taxed at your regular income level.

The tax brackets for long term capital gains are 0%, 15% or 20%. Understanding your tax obligation on your short and long term gains is a chance to use charitable contributions to deduct from your annual tax obligation.

How to find a charity

So which causes and organizations do you connect with? Before you cut anyone a check you need to find who you want to give your money to. You can also consider where your dollars will do the most good, or how you want your money to be spent.

How to give with the most impact

Checking a registered non-profit’s 990 form will give you an idea of where they spend their money. Public Inspection and Disclosure forms, or 990 forms, highlight several major areas of a non-profits money:

  • Total money received throughout the year in grants, donations, events, government fees, revenue and gifts.
  • Salaries and benefits paid to employees.
  • Operational expenses like rent, printing, shipping, and product costs.

The 990 is a good jumping-off point for how to give with the most impact but doesn’t tell the entire story, especially for newer or smaller non-profits. If you want to give to a cause that’s newer, or to an organization that might not have had its non-profit status approved by the IRS yet (which can take a few years), you’re totally able to do so.

Avoiding scams

Of course, there are always a few scammers in any industry. Lucky for us, there are a few telltale signs of a charity scam. The FTC also has more tips on how to avoid charity scams.

  • They pressure you to give right away. This kind of pressure is common in scams because they want you to open up your wallet before you ask for too many details. Any legitimate charity will accept your money year-round because they operate year-round.
  • Brand new charities that claim to help specific disaster-struck communities, like after hurricanes or earthquakes. In order to make sure your money really goes to help people, do your research by checking their website for HOW they collect money. If it’s just a PayPal link for a brand new aid organization with no contact info, this might be a scam.
  • Asking you to donate via cash or wire transfers. Both of these methods are hard to trace, making them attractive to scammers.

Giving is best thought of as a muscle; you need to exercise it to get the most out of it. Fortunately for all of us, there are so many ways to give. Whether you decide to donate time, money, or stocks, you will be making a difference in your community.

How are you planning to give this year?

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The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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