Choosing a Cause That Matters: Making the Most of Charitable Giving
As we come to the holiday season, charitable giving comes to the fore. Do you donate money to charity each year? Perhaps you donate to an organization dedicated to finding a cure for an awful disease. Perhaps you choose to benefit organizations that support and encourage positive growth in our youth. Perhaps you decide to support the local animal shelter or abuse prevention.
To reap the most benefit from charitable giving, you must first choose an appropriate charity to benefit from your generosity. There are thousands of charities working within a huge variety of causes from which to choose. Thus, you can be certain that there is a charity working to bring positive change in a way that you would love to support. Of course, the causes touched upon above are just a few examples of where your donation can make a difference.
Once you have decided that you would like to support a charitable cause, it is important to determine how you will contribute. Most will choose to donate cash; however, you might also consider donating highly appreciated securities, which would allow you to avoid paying the capital gains tax on those assets. Likewise, the charity also would avoid paying this tax due to its charitable status.
Aside from a monetary donation, you may also donate goods. When purging your households to make way for new holiday items, you can donate those that are gently used, but no longer desired. For example, you may have a pantry full of uneaten, non-perishable food that your family is not eating. Consider filling a couple of grocery bags with this food and donating to your local food pantry. Likewise, children often grow out of clothes and get bored with their toys while they are still in good repair. Many charities that benefit children would be delighted to receive these clothes and toys to help the children that they serve. Similarly, when you and your old vehicle finally part ways, you do not have to send the vehicle to a junk yard. Many charities accept any vehicle, working or not, as a donation.
If making a monetary contribution or a donation of goods is not possible at this time, consider volunteering your time to your favorite cause. Elder services, animal shelters, hospitals, and soup kitchens are all wonderful places to volunteer. While the time you volunteer is not tax-deductible, any out-of-pocket expenses associated with volunteering are usually deductible. For example, travel expenses to and from the volunteer site, as well as parking fees and tolls may be deducted.
When you have decided which cause you would like to help and in what manner, you are almost ready to make a donation. Be certain that the charity has received approval from the Internal Revenue Service (“IRS”) as being eligible to receive tax deductible contributions. You can determine the tax exempt status of an organization either by contacting your local IRS office or by asking the organization for a copy of its “Letter of Determination,” which is the formal notification the organization receives from the IRS once its tax exempt status has been approved. Also, IRS Publication 78, Cumulative List of Organizations, is an annual listing of thousands of organizations that can accept tax deductible donations.
Donations claimed as tax-deductible contributions for 2025 must be actually paid to the charity on or before December 31, 2025, and it is best always to obtain a receipt for your donation regardless of the amount. When considering donating to charity, it is also important to check in with your tax advisor, as there have been some important changes. For example, starting in 2026, even taxpayers who take the standard deduction (i.e., don’t itemize) can claim a modest “above-the-line” deduction — up to $1,000 for singles and $2,000 for married couples filing jointly. For those who do itemize, deductions for charitable contributions will only apply to the portion that exceeds 0.5% of adjusted gross income. That means the first 0.5% of adjusted gross income in charitable gifts each year will not reduce taxable income. Further, in 2026, the tax benefits of itemized charitable deductions will be capped at 35%, even for those in the 37% marginal tax bracket. Thus, to make the most of your charitable giving, be sure to consult your advisor before making your donations.
Charitable giving is extremely rewarding. You will not only reap the benefit of knowing that you are helping to make a difference in this world, but when tax season comes you may enjoy a beneficial tax deduction as well.
The information in this article was provided by Attorney Gina M. Barry from our Springfield office. She is a member of the National Academy of Elder Law Attorneys, the Estate Planning Council, and the Western Massachusetts Elder Care Professionals Association. She concentrates her practice in the areas of estate and asset protection planning, probate administration, guardianships, conservatorships, and residential real estate.