It's the traditional season of giving, but with today's slowing economy and declining stock market, like many people you may be feeling a pinch. And understandably, you may be reconsidering the amount of money you can give to causes you've supported in the past.
The unfortunate reality is that just when many of us are by necessity reducing our donations, the need for charitable giving is growing. Charities across the country are concerned that contributions will go down just at the time when the needs are greater than ever.
Is there a solution? I think there is. Because even if you have to balance your budget with greater care this year, I believe with a little planning you can still find ways to continue charitable giving -- and perhaps make your dollars go even farther.
Here are some ideas that may help you make a charitable difference and still be mindful of your own bottom line during these tough economic times.
The first thing you may want to do is set some giving priorities. If you have to reduce your contributions, you could:
-- Make an across-the-board cutback. For instance, reduce the gifts to each charity you usually support by a certain percentage, say 5 or 10 percent.
-- Make a list of charities you normally support. Identify your favorite charities as "have to give." Designate the others as "nice to give." Then divide your contributions among the charities that are most important to you.
Whichever method feels best to you, the key is to make a strategic decision about your giving and not react impulsively.
Take Advantage of Tax and Investing Opportunities
Depending on your tax and investing situation, charitable giving can have a positive impact on your own finances. Some effective strategies include:
-- Using tax planning to your advantage. Giving to charity can help not only reduce your current income tax bill, but can also be an effective way to cut estate taxes that may be due in the future. (The income tax deduction is restricted by your adjusted gross income and the type of contribution, but the estate tax deduction is unlimited.) Also remember that you have to itemize deductions on your income tax return if you plan to deduct charitable contributions. And be sure to request a receipt for donations of $250 or more to a single charity. The tax aspects of charitable giving can be complex, so to maximize the benefit, it's a good idea to talk to your tax advisor.
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