Charitable Giving for Families

 

By Ursula Furi-Perry, Esq.

 

 

This time of the year, many families begin to think about charitable contributions, donations, and service. Before you give your items, money, or time, however, you should make sure you vet the charity of your choice carefully and look into any financial and tax questions which may arise.

 

 

Selecting a Charity

First, ensure that the charity is in good standing and reputable.You can check in with the Nonprofit Organizations/Public Charities Division of the Massachusetts Attorney General’s Office, or use an independent rating body like the Better Business Bureau’s Give.org.

 

If you’re interested in volunteering your time, you should make sure the charity is a good fit for your interests. Nonprofit organizations serve a variety of causes—make sure your interests and views fit with the organization’s if you’re planning to spend time working with one.

 

If you’re donating property or money, you should also make sure your donation is tax deductible. You can check IRS Publication 78 for a list of qualified charities, explains Joseph Devlin, professor at the Massachusetts School of Law at Andover who specializes in tax and wills and trusts issues.

 

Don’t be afraid to ask questions: For example, ask what the charity plans to do with your donation or contribution, and whether any money from your donation will be split with a for-profit company.

 

Online Resources:

• The Attorney General’s Office, Nonprofit Organizations/Public Charities Division, see http://www.mass.gov/?pageID=cagosubtopic&L=3&L0=Home&L1=Non-Profits+%26+Charities&L2=Donating+to+a+Charity&sid=Cago

• Guidestar nonprofit reports, http://www.guidestar.org/

• The Better Business Bureau’s Give.org, http://www.guidestar.org/

• IRS Publication 78, http://apps.irs.gov/app/pub78 (also available at your local library)

 

 

Financial Tips

“The tax rules encourage charitable giving, by allowing donors to take a tax deduction for the amounts contributed,” Devlin notes. “But there are some limitations [and] pitfalls.”

 

First, Devlin says the deduction is available only to people who itemize their deductions on Schedule A of their Form 1040 tax returns. In addition, “there are limits to them amounts a donor can deduct from her tax return, so if it is a sizable gift in relation to the taxpayer's adjusted gross income, a tax professional should be consulted,” Devlin says, adding that tax benefits of donating to a charity may be limited for high-income taxpayers.

 

Keep consistent, thorough, and detailed written records of your donations and contributions, Devlin recommends, such as a cancelled check or credit card statement. “If it is a cash contribution, the donor should get a written receipt from the charity, detailing the name of the charity, the date of the contribution, and the amount of the contribution,” he says.

 

Property donations come with their own sets of rules and requirements for record-keeping. If you’re donating a car, for example, the Attorney General’s Office recommends that you keep a written receipt or acknowledgement of the donation by the charity; a detailed description or picture of the car; a copy of the registration or title you’re giving to the charity; and the fair market value of the car and a description of how that value was calculated.

 

“Generally, the deduction for a gift of property – such as clothing – is limited to the fair market value of the property, not what the donor paid for the property,” Devlin explains. One mistake donors make? Claiming the full amount for a donation when the donor receives something in return for the gift—for example, when buying a $100 ticket to a charity event, you can only deduct $75 if the ticket has a value of $25.

 

If you’re giving your time to a charitable organization – by volunteering or providing services – there are no tax deductions you can claim, Devlin adds.

 

Teaching Moments

 

Undoubtedly, many families who contribute, donate, or volunteer for charitable organizations can use their contributions as valuable teaching moments. Donating or volunteering together as a family can instill the importance of giving (whether it’s giving items, money, or time) in your children.

 

“Parents can teach their children the value of charitable giving in two ways: first, if the gift is deductible, parents can show their children how they can reduce the amount of income taxes they owe by giving to charities,” Devlin explains. “Second, parents can encourage their children to provide services to charities, whether it is mowing the lawns of charitable organizations, shoveling sidewalks and driveways, or visiting the elderly.”

 

Charitable Organization Guide

 

Not sure where to start when picking a nonprofit organization to whom you can donate, contribute, or volunteer? Check out the following featured Massachusetts options to get you started:

 

Education:

 

United Way of Massachusetts, http://supportunitedway.org/

 

The Literacy Project, http://www.literacyproject.org/

 

Health:

 

American Red Cross, http://www.newenglandblood.org/

 

March of Dimes, http://www.marchofdimes.com/massachusetts/

 

American Heart Association, http://www.americanheart.org

 

Animals:

 

Massachusetts Society for the Prevention of Cruelty to Animals, http://www.mspca.org

 

The Environment:

 

The Conservation Fund, http://www.conservationfund.org/

 

Natural Resources Defense Council, http://www.nrdc.org/nrdc

 

Families:

 

Massachusetts Society for the Prevention of Cruelty to Children, http://www.mspcc.org

 

Project Bread, http://www.projectbread.org

 

Families First, http://www.families-first.org/

 

Casa Myrna Vazquez, http://www.casamyrna.org/

 

The Salvation Army, http://www.use.salvationarmy.org/mas

 

Big Brother/Big Sister of Massachusetts, http://www.bbbsfoundation.org/

 

 

Ursula Furi-Perry is an attorney, adjunct professor, and mom of three boys in Haverhill. She is the author of four books and more than 300 articles on legal topics. She can be reached at www.furiperry.com and authors the Legally Mom Blog at

http://wickedlocal.com/legallymom