As the year winds to a close (or, let’s be honest, steamrolls toward December 31) and we take time to appreciate and give thanks for our many blessings, our thoughts inevitably turn to those in need. Of course, part of the reason for that is the barrage of phone calls, email and snail mail solicitations from organizations hoping to be included in our annual charitable giving. Whoever said that it is better to give than to receive was right. For so many of us, our needs are met and we are able to focus instead on our wants. Lucky us. Seriously. Wouldn’t it feel better to help make a difference in the life of someone who really needs it instead of getting another trinket you don’t need and will discard when the next big thing comes along?
Altruism is fantastic, we are big fans here. We like to give with our whole hearts and we love it when you do, too. We are also big fans of being smart about where we make our charitable donations, and we don’t hate the idea of getting a break on our income taxes in consideration of our largesse. Or smaller-gesse, as the case may be. As you make your plan for giving, to take advantage of that deduction, you need to itemize on your income tax return and you need to be sure that the group to which you donate is a qualified exempt organization. The IRS has a great tool that allows you to check whether a group has exempt status. Just because an organization may be a not for profit corporation doesn’t mean that your donation to it is tax exempt – it must be an exempt organization that has applied for and received 501(c)(3) exempt status. Note, though, that most (not all) churches, synagogues, mosques and other places of worship are generally exempt even though they may not always be searchable with the IRS’ tool. Your donations to non-exempt organizations will also no doubt make an impact in helping those groups achieve their missions, you just won’t be able to deduct the gift on your tax return.
Since we are talking about taxes, your tax benefit can be twofold if you make a donation of appreciated assets to an exempt organization. Not only will you have a charitable deduction in the amount of the value of the gift, but you can also avoid capital gains tax. Twice as nice!
Before you make your donation, you may want to do a little homework first. Are you making your donation to the correct entity? There are many similar named groups out there, and you should take the time to be sure that when you write your check, it’s really going to who you intend to support. You should also take a few minutes to background check the group to see how much of every dollar donated actually goes toward funding the charitable mission. You can look up online to see how a group stacks up, and how well it is rated in the charitable giving world. If you want to support a particular cause, you can do a little research to see which group will allow your donation to make the maximum impact for the cause and not as much for the administration of the organization itself.
In terms of record keeping, be sure to get a receipt for your donation. If you have automated the process through payroll deduction or other mechanism, make sure you get documentation to prove the total of your contributions for the year. While you can’t get (tax) credit for your time spent volunteering, you can deduct your expenses associated with volunteering – mileage, tolls, parking, things like that.
While it’s the year-end that has us thinking about charitable giving today, we hope that you will make a promise to support an organization that is near and dear to your heart and that you will show it love all year long. Get out in your community, look around, see a need and address it. Next week, our firm will distribute thousands hats and pairs of gloves to children in the Syracuse City School District, carrying on what is now a twenty-year tradition originally begun by our beloved and missed mentor, George Wladis. When you make a commitment and stick with it, maybe, just maybe, your heart will grow three sizes.
Jennifer B. Granzow
Ms. Granzow holds a JD from the Syracuse University College of Law. Her practice is concentrated in the areas of business and corporate law, real estate, economic development, and government relations, with an emphasis on grants and public funding.