Financially smart ways to support the social causes you care about.
By Jenny Hoff, Photo by Katt Yukawa
Supporting social causes you care about can have a great return on investment in the social impact you help make. But there are also financially savvy ways to donate that can save you money, particularly when it comes to taxes. You can also increase your financial impact without having to increase the amount you give. Here are some strategies to consider.
Donate to Qualified Charities
One of the most straightforward ways to support social causes is by donating to qualified charitable organizations. Not only does your contribution make a difference, but it can also lead to tax savings. When you itemize deductions on your tax return, charitable donations are typically deductible, reducing your taxable income and potentially lowering your tax bill. Make sure you get receipts from any organization you donate to and ensure it is a tax-exempt organization.
Utilize Donor-Advised Funds
Donor-advised funds (DAF) offer a convenient and tax-efficient way to support multiple charities. By contributing to a DAF, you can receive an immediate tax deduction for the full amount of your donation, even if you choose to distribute the funds to charities over time. This allows you to maximize your tax savings while strategically allocating your charitable giving.
Explore Matching Gift Programs
Many employers offer matching gift programs as part of their corporate social responsibility initiatives. This means they will match their employees’ charitable contributions, effectively doubling the impact of your donation. Be sure to check if your employer offers a matching gift program and take advantage of this opportunity to amplify your support for social causes.
Consider Donating Appreciated Assets
Instead of donating cash, consider contributing appreciated assets such as stocks, mutual funds or real estate to charity. By doing so, you can avoid capital gains taxes on the appreciation while still receiving a charitable deduction for the fair market value of the asset. This strategy not only benefits the charity but also allows you to optimize your tax planning.
Volunteer Your Time and Skills
While financial contributions are valuable, volunteering your time and skills can also make a meaningful difference in supporting social causes. Whether it’s mentoring young women, organizing community events or providing pro bono services, your expertise can have a profound impact on the organizations you support. Additionally, volunteering expenses such as mileage and supplies may be tax-deductible if incurred for qualified charitable purposes.
Stay Informed About Tax Incentives
Tax laws regarding charitable giving can change from year to year, so it’s essential to stay informed about any available tax incentives. For example, recent legislation may provide temporary incentives for charitable giving in response to specific societal needs or economic conditions. By staying up-to-date on tax laws and consulting with a financial advisor or tax professional, you can maximize your tax savings while supporting causes close to your heart.
Supporting social causes doesn’t have to be a financial burden. By using tax-efficient strategies and exploring creative ways to give back, you can make a meaningful impact on your community while also saving money.