Making a Difference: The World of Giving -- Year-end Giving and Tax Deductions

12/27/2011 07:26 pm ET | Updated Feb 26, 2012

Why does every nonprofit organization contact me at the end of the year? Is this the only time of year that individuals are charitable? How do I make sure my donation can be deducted on my tax return?

Many donors rush to make their charitable contributions before each year ends. Let's look at the reasons why they do this.

First it is important to remember that out of the $290 billion donated in 2010, more than 82% of it came from individuals. People like you and me are making a difference with our charitable contributions. Further, during the holiday season it is estimated that 80% of charities receive 50% of their budgets during the last quarter of the calendar year. Additionally, studies show that on average 44% of individuals say they plan to make a donation during the year end to a charity or two.

The age old question that beguiles donors is deciding to which charity to give financial donations... and how to not let guilt drive your philanthropic decisions. Many individuals ask how to avoid feeling guilty when they receive so many solicitations asking for donations at year end and only select to give to a few.

Most of us have to make choices about which charities will receive our donations. These are often difficult choices because so many causes are worthy. But it is through these choices that donors are each sharing where they want to affect change in their community and world. Remember, your giving reflects your intentional expression of your values and passion. Whether you give $25, $250, $2500 or $25,000, you can become an advocate for your cause because you know that you can really make a difference!

There are some factors to consider before donating. These things include determining what you care about and where you want to give your charitable dollars. This is the first step. Then review all the appeals you receive. To avoid the "guilt" factor when you want to say "no" to a request for a donation, determine how much you are doing to donate at the year-end time frame and to what causes you are doing to make contributions and stick to that decision. Then select the nonprofit organizations; a lot of charities are worthy of support, but it is important for individuals to be clear about where they want their donations to go (i.e., what they want to support). Remember, choices have to be made... most individuals cannot give to everything they would like to support financially; choices have to be made so be clear about where you want to affect change... what do you really care about? Finally, you can check out the charity by visiting the Better Business Bureau Wise Giving Alliance, Guidestar, Charity Navigator or talking to the organization directly.

Here are some simple tips on how to donate successfully and have a high probability of being insured a charitable tax deduction on your next return.

• A check is the preferred method; write the official name of the charity on the check and always ask for a receipt.
• Most charities now accept a donation via credit card. If you do it this way, be sure to keep the receipt. If you donate online, be sure to print the receipt.
• Donating cash is not a good idea for both security reasons and the lack of a tax record
• You can make a donation via email or text, but be sure to keep a record of it
• Keep detailed records; tax laws require a record of the transaction; to claim a deduction for charitable contributions, you need to have a dated receipt such as a cancelled check or a dated credit card donation; the receipt needs to show the name of the nonprofit organization and the amount of the contribution
• Tax deductions are thought to be a popular reason why year-end appeals are so popular; most nonprofit organizations realize that in the months of November and December individuals are looking at their taxable income and seeking opportunities to reduce their tax burden

Finally, here are five (5) recommendations and tips for your year-end charitable giving plan of action that will help to insure you Make A Difference (M.A.D.):

• You must make your donation by 11:59 pm on December 31st for you to be able to count it on this year's tax return. If donating via U.S. mail, Fed Ex or UPS, the envelope must be postmarked by 11:59 pm on December 31st. If you are donating via credit card, be sure it is processed before 11:59 pm on December 31st. Finally, if making a donation via stock or securities doing it earlier in this last week is better to insure it is processed before the deadline.
• You must have receipts for your donations. If you donate over $250, a receipt from the nonprofit should be sent to you automatically. If it is not, contact them asking them for a receipt.
• When donating items such as furniture and clothing keep detailed records for each donation; be sure to get a receipt that is detailed including the date, name of the organization and condition of the goods; the IRS is getting stricter about details
• Get involved with the nonprofit organization to which you donate money; you will automatically be more informed and feel better about your donations!
• Know that you can really make a difference!

Bonus Tip: Remember you can make a gift to a charity at this time of year to honor or remember others in your family or circle of friends and still claim it as a tax deduction

As 2011 draws to a close, begin thinking about 2012 and what you will do to Make A Difference (M.A.D.). Begin by setting a charitable budget and determining the causes nearest to your heart. By doing these two simple things in addition to the recommendations above, you are ready to Make A Difference in 2012.