The holidays are a time of giving and spending intentional time with loved ones. Gift-giving can take on many different forms and a way to give back this holiday is to donate to your favorite charities or one that interests you. This can help keep the charity programs funded for another year and there are benefits for both parties in regards to donation.
Why Donate?
Research has shown that giving back is beneficial to your mental health. It is uplifting to help out a cause that you care about. Additionally, this could help you financially, as well as you could be approved for a tax break.
Donating before January 1st is a great idea. Below is a list of reasons to consider if you’re thinking about giving back this holiday season.
It’s Good for You
- It’s a simple concept, but it really works. Helping those who do good, helps you feel good. Health benefits include: Increased
- Happiness
- Lower Stress Levels
- Less Depression
- Higher Self-Esteem
- Lower Blood Pressure
- Longevity of Life
Research shows that when participants give money, their brain’s pleasure center lights up, improving body chemistry and emitting endorphins.
Fund Charities that You Care About
When deciding where you want to donate to, be mindful of what personally speaks to you. Think about your interests, passions, and charitable causes you are interested in supporting. Start with looking at each nonprofit’s mission statement. Do you feel personally motivated by that cause? When people donate to charities they care about, they are then in turn helping that charity continue to do good in the world.
Also, it is not necessary to be a millionaire to donate to charities you care about. Giving $10, $20 or even just a few dollars can go a long way. When it comes to charity work, any amount of giving helps and will in turn make you feel good about making a positive impact.
Tax Benefits
The tax benefits of giving are notable. If you donate before January 1st, your taxable income will be reduced in the next year. It is important to note that donations made before December 31st, 2021 will count towards the 2021 tax year, even if the charge isn’t made until 2022.
The impact on your taxable income will be determined by your income level, donation amount, and other variables. A good way to set yourself up for success is to talk with a Highlands Community Bank representative, to gain the facts regarding your donation and what to expect from the tax year.
Consider an Employer Donation Match
Many employers and companies partake in end-of-year giving. In certain circumstances, employers will match a certain amount of monetary gifts given by employees to a nonprofit of their choosing. If you’re unsure about your employer, it’s worth contacting your Human Resources department about an employee gift match. Knowledge is power, so reach out to your HR department and make the most of your year-end donation!
Before you get ready to donate, make sure that the charity is legitimate, especially if you are trying to qualify for tax-exempt deductions. A great way to check the legitimacy of the charity you’re interested in is to use the IRS Select Check tool. This tool lists nonprofit organizations that are in good standing with the IRS, however not all of them are located here. It is vital to research the charity you’re interested in giving towards before you donate. You can ask for their financial reports or even find them online. When looking at financial records, look at how much money is going to overhead rather than the actual programs. A way to know that a charity is worthy of your donation is to donate only to charities that use two-thirds or more towards programs.
Also, look out for charitable giving scams. Unfortunately, the nonprofit space can be a front for an internet scam. A good rule of thumb is to never give a gift to an organization that you didn’t contact first, whether this is in person, on the phone, or through an email exchange. This could mean that you’re being targeted and could be financially at risk. If you’re choosing to give online, make sure that there is an “HTTPS” at the beginning of the URL. This means that the link is secure and that your financial information isn’t at a high risk of being stolen or compromised.
If you do decide to donate to a charity, be sure to keep your records. It’s important to have all the right documentation so that when tax time comes around, you’re prepared. Be sure to know the name of the organization, the amount donated, and the date of the donation.
As always, remember the reason behind donating to a charity you care about. This holiday season, help out a cause that you care about and also enjoy the tax benefits in the new year. If you’re thinking about donating this year, contact your Highlands Community Bank Representative with any and all questions!