Ways to help you bemore effective in your generosity in 2020
If you’re fortunate enough to be able to donate money this year, plenty of causes need your attention.
In a year like 2020, choosingwhere to direct your dollars is like picking your favorite child. Should yourmoney go toward nonprofits providingbasicneeds, organizations fighting for social justice or a campaign to help local small businesses stay afloat? If you prefer donating your time, how do you give back when volunteer events are limited by the pandemic?
Here’s a guide to prioritizing your donations, taking advantage of special tax deductions for 2020 giving andusingyourholidayspending to make a difference.
Tax benefits of giving during the pandemic
This year, in addition to helping those in need, you may be eligible to receive added tax benefits for your donations.
As part of the Coronavirus Aid, Relief and Economic Security Act, taxpayerswho take the standard deduction are allowed an additional deduction of up to $300 for charitable donations made in cash. Previously, charitable contributions could only be deducted if taxpayers itemized.
Taxpayers who itemize can deduct up to 100% of their adjusted gross income for cash donations (up from 60%) made in 2020.
These incentives don’t apply to all contributions — onlythosemadetoqualifying public organizations, which the IRS defines as “those that are religious, charitable, educational, scientific or literary in purpose.” Contributions todonor-advised funds, nonoperating private foundations and support organizations don’t qualify for the deduction.
The IRSwebsite has a tool to look up tax-exempt organizations.
Use your values to inform your giving
Choosing which cause to support is deeply personal. If you haven’t already, make a listof yourvaluesandwhat you’re grateful for. This list is the basis for your giving plan that can help you determine whichcausestoprioritizeand which ones you can say no to, says Jeannie Sager, director of the Women’s Philanthropy Institute at Indiana University.
Sager says youcan also use a giving plan to frame your actions outside of hitting the “donate” button.
“What kind of volunteerismareyoudoing? Whatmessages are you sending as you retweet or share things on social media? Howdoes that tie into your philanthropy and your values?” she suggests asking yourself.
Early in the pandemic, you may have committed small actsofgenerositysuchasbuying gift cards to support your local coffee shop or paying your hairstylist when the salon was shut down.
Keep thecommunity spirit going, says Eileen Heisman, presidentandCEOofNational Philanthropic Trust, a public charity that manages donor-advised funds and is based in Jenkintown, Pennsylvania. “I’m a big fan of small grassroots charities,” she says. “A lot of everyday neighborhood arts organizations, small ones, are disappearing.”
Research by theWomen’s Philanthropy Institute during the early months of the pandemic showed that organizationsdedicatedtobasicneeds and health fared better than thosefocusedonreligion, and especially better than those serving all other purposes, such as education, the arts and the environment.
Resources such as Charity Navigator and GuideStar help you research a charity’s financial health, tax-exempt status and practices. Your localcommunity foundationwebsite can also give you an idea of nonprofits to support.
“We encourage people to give deeply to a few causes rather than spreadingmoney out to many causes,” says Grace Chiang Nicolette, vice president of programming and external relations at the Center for Effective Philanthropy in Cambridge, Massachusetts.
Unrestricted gifts are typically the most useful to charities, Nicolette says, referring to donations that don’t come with requirements on howthemoney can be used.
Give back while shopping
This holiday season, 65% of Americans say the pandemic will have an impact on theway they plan to give gifts. At least, 3 in 10 Americans (30%) say they’ll send moneyor gift cards, and28% say they’ll ship gifts to loved ones they typically give gifts to in person, according to NerdWallet’s 2020 Holiday Shopping Report.
Around 1 in 8 Americans plan to spendmore on charitabledonations, and almost 1 in 5 plan on spending less on donations in 2020 than they did in 2019, the report says.
If you cannot set aside money for donations, use your online holiday purchases to give back. Many online retailers make it easy to donate as you’re checking out or buying gift cards, such as through the Paypal Giving Fund or Amazon Smile program.
Heisman suggests using apps that roundupyour purchases and donate the difference to charity. Boomerang Giving, ChangeUp For Charity and GiveTide are some examples.
You can also donate your unused airline miles or credit card rewards to charity, but be aware of the downsides. The charitymay not always receive the full amount of your donation and you cannot apply this contribution toward the CARES Act tax deduction.