As 2020 draws to a close, charities are ramping up their fundraising efforts. You may be getting more appeals this year due to the pandemic. Wondering how you should approach giving – not just this year but any year? Here are some answers to some commonly asked questions.
Q. How do I know which nonprofits to support?
A. Selecting an organization is a very personal decision and depends on your values and goals for the gift. Do you prefer your donation to stay in the community, or would you like it to have a national or global impact? Do you prefer to give smaller amounts to multiple organizations or a larger contribution to a single organization? These are just some of the questions you'll want to consider.
Q. How do I know if the organization is trustworthy?
A. Charitynavigator.org provides a rating system to help you evaluate the charity of your choice. They rate each nonprofit based on financial health and accountability and transparency. However, don't be discouraged from donating to a local organization that is advancing causes in your community if they don't appear or are lower on this list. Smaller charities simply may not have the same resources as a national organization to provide the reporting necessary for the list.
Q. How can I make sure my gift is tax deductible?
A. Go to irs.gov to find out. Qualified nonprofit organizations include religious, charitable, educational, scientific and literary nonprofits as well as those dedicated to preventing cruelty to children or animals. (Political organizations and candidates are not eligible.) Your financial advisor can work with your tax professional to determine the most tax-efficient way to give to a cause.
Q. Anything I should know for 2020?
A. Due to the CARES Act, this year you don't have to itemize to take a charitable gift deduction. You can take an above-the-line deduction of up to $300 of cash contributions to charities. The Act also changed charitable contribution limits. The 60% of adjusted gross income limit for cash gifts is suspended in 2020 for individuals who itemize deductions, and for corporations, the limit on charitable contributions was increased from 10% to 25% of taxable income.
Q. I've had unexpected expenses this year but still want to give back. What can I do?
A. Giving back can take many forms. Consider donating your time, clothes or household items that are in good shape but no longer used instead of a monetary gift. Many organizations have lists of things they need on their websites.
Edward Jones, its employees and financial advisors cannot provide tax or legal advice. You should consult your attorney or qualified tax advisor regarding your situation.