When examining your finances before year-end, one way to save on taxes for this year is to contribute to your favorite charity. It is a win-win situation on both counts, you feel good and it saves you money on your taxes. It is something you would probably do anyhow, but why not give a bit extra so you can save on your taxes this year? Before you whip out the checkbook, here are a few things to think about:
1) Have you checked out the charity itself? charitynavigator.org. It is a charity evaluator that lists the breakdown of dollars donated that actually go towards the charity. For example, Doctors Without Borders, one of my favorite charities, uses 87.3% of their money towards their mission. What is your charity’s percentage?
2) Bundle your charitable contributions. If you found yourself giving $50 here, $50 there, you might not be giving as much as you like or alternatively, giving too much. Set a budget in January for how much you would like to donate this year. Then plan out your spending over the course of the year. You can reevaluate during the year, but like any other part of your spending plan, have a plan and stick to it. You will feel clearer about your financial donations and intentions. Another way to make it fun is to keep all the donation notices (with the pictures of the cute polar bears) you get throughout the year in a separate folder. When November rolls around, take them out and write your checks based on your financial intention.
3) If you aren’t donating…. Let the charity know. It probably costs them a great deal of money to keep sending you notices. Do them a favor and let them know so they can save money (and trees too!).