Budget, plan and vet: How to smartly donate to charity

Before Kris Kewitsch makes a charitable donation, she first makes a plan.

Each year, she creates a giving budget, with one organization receiving the bulk of her support and others accepting smaller, recurring donations. There’s also money set aside for unexpected causes that might pop up, from a natural disaster to a niece’s charity 5K.

“When I think about giving, I think about that in the context of my investment portfolio or my retirement portfolio, to ensure it’s diversified,” said Kewitsch, executive director at the St. Paul-based Charities Review Council. “I think about, how much do I want to give in a year?”

In many ways, giving to charity has never been easier. There’s an organization or GoFundMe for just about every cause, and making a donation is often as simple as tapping a smartphone screen.

Giving has its benefits, from tax deductions to the knowledge that your money is making a difference. But the sheer volume of need can be overwhelming, and the pressure of persistent online requests can make it tough to figure out what’s legitimate — and what works best for you.

Before you dole out your dollars, here is some advice for making the most of your charitable giving.

The first step is to craft a plan for your giving, beginning with how much you want to spend and the causes you care about most.

“People have to figure out how much they’re willing to give, and then really ask themselves some deep questions about whatever changes they want to see in the world,” she said.

Once you’ve identified causes, selected recipients and made a budget, it’s easier to avoid impulse gifts or pressure to act quickly to support an issue or organization you don’t know very well.

“If you get a call from someone asking you to support what they care about, you can honestly say, ‘I already have a plan for this year. Feel free to send me information, and I’ll consider it for my plan next year,’” Kewitsch said.

Before deciding where you want to give — even if you already have an organization in mind — it’s important to do your research.

“This may sound like the simplest thing, but the vast majority of people are not going to bother to do that,” said Bennett Weiner, president and CEO of the Better Business Bureau (BBB) Wise Giving Alliance. “While most of the time that will work out, sometimes you’re going to be disappointed when the facts are revealed.”

“Gaining a basic understanding of just how unregulated the nonprofit sector is will work wonders for any donors feeling pressured to give,” said Laurie Styron, CharityWatch CEO and executive director, in an email. “A fundraiser that uses high pressure tactics by claiming that something bad will happen if you don’t donate immediately or who manipulates language by falsely claiming that your donation will be ‘matched’ are some things to watch out for.”

Groups that vet charities and provide online tools for donors to search organizations and causes can be a helpful place to start. But be aware that not all are equally thorough and objective, Styron said.

There should be plenty of information available on a charitable organization’s website, including annual reports and tax forms. If you’re not finding what you’re looking for, don’t hesitate to pick up the phone, Andes said. Staff are usually happy to talk to potential donors.

“Everyone should want transparency,” she said. “Are they providing information on what they do? Is it clear what they’re doing? Do they have results on their website that you can see, that make sense to you? I would say the lack of transparency for an established organization should be a question mark for a donor.”

Donations to 501c3 organizations are often, but not always, tax-deductible. If that’s important to you, be sure to check with an organization before giving to make sure you understand the tax implications, Kewitsch said.

There will also be a universal charitable deduction — up to $1,000 for individuals and $2,000 for married couples filing jointly — that extends to filers who do not itemize.

“The hope is that with that additional tax incentive, some of the smaller givers will be inspired to make a contribution,” Weiner said.

When it comes to tracking the impact of an individual donation, it’s easier for big donors to acquire information than smaller ones, Styron said. And often, producing that information means spending a chunk of the gift on staff time.

For the average donor, the best bet is to figure out an organization’s overall impact before giving, not after, she said.

“A good rule of thumb is that if you don’t trust a charity to use your donation wisely, don’t give to that charity,” Styron said. “After your donation leaves your account, that’s not a good time to start questioning how it will be used.”