Gift-Giving That’s Charitable and Budget-Savvy

Gift-Giving That’s Charitable and Budget-Savvy

This year, we're giving the gift of giving to many of our friends and loved ones by making charitable donations in their names. According to the American Red Cross, nearly 40% of Americans are speaking with others about donating to charity rather than buying them a gift. Despite the economic downturn, people still want to be charitable; donating in lieu of holiday gifts is a good way to make that possible.

Before you click your way to better the world, however, a few things to consider:

Make Sure It’s Legit

Depressing though it may be, charity hoaxes abound, and more people tend to buy into them during the holidays. Avoid this by making sure your charity is legitimate by checking it out on Charity Navigator, the American Institute of Philanthropy, or the Better Business Bureau Wise Giving Alliance .

Consider Charity Gift Cards

They let the recipient choose a charity of her choice, so it’s more like a real gift. But a percentage of the money will go toward administration fees and there are sometimes expiration dates (think of the millions of normal gift cards that are unused each year). Good places to buy one: TisBest Philanthropy or CharityChoice Donation Gift Cards. Note, however,that TisBest cards have a $2 handling fee and 3% going to the credit card company for processing. CharityChoice deducts $0.50 per card, plus 5% in administrative fees and 3% for credit card processing.

Is Your Friend Into It?

We want you to be charitable, but be aware that many people will be expecting more traditional gifts. We recommend giving the gift of charity to like-minded friends who’ll appreciate the gesture. For others, a donation might appear as impersonal as a generic gift card (one from which they don't receive any direct benefits, at that). And, above all, make sure you don't contribute to an organization that your friend wouldn't support!

Send a More Meaningful Card

If you're not ready to invest in a full-on contribution, consider sending a holiday charity e-card, such as the ones from Goods 4 Good.
The minimum $10 that they charge to do this is enough to pay for soap for 450 nursery school children or locally-made school uniforms for 10 children.

You Might Even Earn a Tax Deduction

As the giver you'd be potentially eligible to earn a tax deduction on this donation (not the recipient, even though it's in her name). For the deduction: Save your receipts and canceled checks, and make sure that you’ll be able to itemize on Form 1040, Schedule A. All the same, in 2009, the standard deduction for a single person was $5,700. This means that, if your total itemized deductions—in addition to your charitable donations, this includes medical/dental, job expenses, home mortgage interest, etc.—will be less than that, it makes sense to go with the standard deduction and that the charitable contribution won't make a real difference. Note that donations to some organizations like Kiva are not tax-deductible because they are micro-loans that will eventually be repaid.

Because we like to be on the right side of etiquette, we asked Lizzie Post of the Emily Post Institute (she's Emily's great-great-granddaughter!) if it's rude to receive a material gain for giving someone else a gift. She told us not to sweat it. "If the gift is given with good intent, in the spirit of generosity, then [the tax break] is not the motive behind the act." In fact, the Emily Post Institute might do the exact same thing! The Institute is considering donating time charitably in lieu of regular client gifts.

Our favorite part: Many organizations, like the Nature Conservancy, don't reveal to recipients how much has been donated in their names—unless the giver requests that the information be made available. Instead, they tell recipients only that a donation had been made. This is nice if you are only able to swing a small amount and don't want anyone to know exactly how much. As for whether it's proper etiquette to keep that under wraps, the Emily Post Institute says it's OK to keep mum. "It's entirely the giver's choice."

Being charitable and budget-conscious—that sounds like a good present to us and to our recipients. (And to the world!)

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