So far, on this blog, I have spent a lot of time talking about beneficial ways to make and save money. However, another very important piece of the puzzle of financial success is making donations to charitable organizations.
Reasons to donate your money
In my mind, donating my money is perhaps one of the most fulfilling things about HAVING MONEY. It’s fulfilling because I get to decide where to distribute the money so that it will do the most good for what I am interested in.
If the very fact that you get to help out worthwhile causes of your choosing doesn’t appeal to you, let me appeal to your more greedy side. (**Evil laugh**)
In a book I read several years ago by T. Harv Eker titled, “Secrets of the Millionaire Mind,” the author reveals the following characteristic/secret of rich people: Most, if not all of them, donate money to worthwhile causes. He does not delve in to the reasons behind this. However, his main point is that if you want to have the mind of a millionaire, you might as well start donating money NOW to get used to the idea. Quite an interesting concept, and it is one that I definitely took to heart.
Note: click on the Amazon link below to pick up a cheap, used copy of T’s book. Definitely worth the quick read that it is!
How much to donate
In 2001, the average percentage of personal income donated to charity was 1.58% (see article link below). However, in T. Harv Eker’s book, he states that the rich donate approximately 10% of their personal income to charity.
My advice to you? If you don’t currently donate money to charity, pick the 1.58% number and start from there. The key takeaway is that donating ANY amount to charity is great!
How to donate
I would recommend either paying by credit card or check. Both of these methods will provide a written record of your payment that can be tracked in case your donation is ever questioned. I personally prefer to donate by credit card because I get cash back when I use my Chase FreedomSM Credit Card (see link below to cash back credit card post)
Finding Worthwhile Charities
There are several easy ways that you can find worthwhile charities to which you can donate money and/or personal property.
Church / Tithing – Tithing is basically donating to a church to help them with their programs, salaries, etc. While I do not personally tithe, I do believe that this a great cause. My parents tithe every week.
Interesting fact I came across –
According to the link below from nj.com, data collected by The Center of Philanthropy at Indiana University has found that 37 percent of churches nationwide saw an increase in donations in 2009 and only 7 percent of churches surveyed were forced to lay off full-time employees, despite the recession conditions.
I searched extensively to find the total yearly donation amount to churches nationwide, but I could not find such a number. However, I did find that in New Jersey, the Archdiocese of Newark, which supports 1.5 million Catholics in Bergen, Essex, Hudson and Union Counties raised $9.6 million in 2009.
The Internet – The internet has made it extremely easy to find charities that you are interested in. I use a website called Charity Navigator because it has a great category search feature. Since I am a big fan of health research charities, I just select the Health category at the top of the main screen, and the link below resulted. I can then find all sorts of charities to evaluate!
Fundraising Events – This is probably the most common manner that I donate money. I receive many emails each year from my friends requesting funding support for a charity event they are doing. Examples include such events as the Multiple Sclerosis 150 Bike Ride, Walk for Babies, Leukemia and Lymphoma Society Half Marathons, and others. All are great causes that I like!
A great thing about giving money in support of friends doing these events is that they often return the favor by donating money to support me during the fundraiser I do in June each year. An added bonus!
Update on 9-Mar-2010 – I have now registered and gotten my personal donation page updated for this year’s National Multiple Sclerosis 150 Mile Bike ride event. This takes place in June of this year, and proceeds will go to support MS research and support programs.
If you are interested in making a tax-deductible donation, click on the link below!
By now, you’ve realized the benefits of donating, found a charity, and donated money using your cash-back credit card or a check. What’s the next step? See if you can request a match for your donation from the company you work for!
These days, many private companies have very generous matching programs because they get tax write-off benefits from donating money. You should definitely take advantage of this!
The best way to do this is to call your Human Resources department at the organization you work for, and perform the following steps
• See if the company does donation matching
• If they do, find out if the charity you donated to is eligible for company match.
• If the charity is eligible, fill out the matching donation forms either online or hardcopy, and submit them.
• Be patient. It may take several months to be processed. But, eventually, it will go through, and the charity of your choice will have even more funding! Viola!
How to Deduct Donations On Your Taxes to Lower Your Taxable Income
At a high level, you have two options for deductions to your taxable income.
• You can take the standard deduction, which was $5700 for Single (non-married) individuals in 2009 (see link for standard deduction amounts Standard Deduction Amounts)
• Or, itemize all of your deductions using IRS Form 1040, Schedule A.
Note: You are not eligible to take the standard deduction if you do not meet certain income and other criteria. It also would not be wise to take the standard deduction if your itemized deductions are greater, since itemizing your deductions will result in paying fewer taxes.
If you do decide to itemize your deductions, download a Schedule A form (link can be found below), and fill it out.
Download a Schedule A Form and Itemize Your Donations
For a great, comprehensive list of eligible expenses that you can itemize on your IRA Form 1040, see the link below:
Comprehensive List of Tax Deductible Expenses for Form 1040
Well, I hope this post gets you started on the great exercise of donating your money! Remember, the key is just to get started, even if it is a small amount!
Keep on learning!
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