Earn / Taxes

Time vs. Money vs. Things: What Should You Give To Make The Biggest Impact?

Kathryn Tuggle  |  December 27, 2018

Giving is easy, but how do you know exactly what to give in order to ensure that your time, money and goods make the biggest impact?

Although many of us enjoy being involved with charities and nonprofits year-round, the holidays—and next year’s looming April 15 tax deadline—tend to offer additional inspiration for generosity.

Certainly, the act of giving is one that’s simple, even universally understood. But knowing exactly what to give and when to give it can be a tough decision. And this year the landscape is a little more complicated because of the recent changes in the tax law. The standard deduction has climbed to $12,000 for single filers, $18,000 for heads of household and $24,000 for married filing jointly.  If your deductions—including your charitable ones—don’t exceed that amount, it won’t make sense to itemize. But that doesn’t equate with not giving.

Bottom line: Our time, money and material goods are limited in supply, so when we give something, we want to make sure it’s going to make an impact and benefit those who need it most. If you’re on the fence about your giving strategy, take a look at our rundown to see where you stand and what might be best for your situation.

You Should Consider Giving Things If …

You’re ready to declutter. Sometimes we all need a good “stuff” purge, explains Melanie Schnoll Begun, head of philanthropy management for Morgan Stanley. “Have a look through your belongings and think realistically about how often you actually use those items that may be collecting dust in the closet.” If you can’t remember wearing a piece of clothing during the last year, for example, it may be a prime candidate for donation.

Once you’ve identified a few items you might want to donate—including clothing, toys, furniture or even canned goods—it’s time to do a quick search to see which nonprofits in your community would benefit most from your gift. It’s incredibly important to connect your donations with the best home, encourages Jared Feldman, partner at accounting firm Anchin. For example, an ideal match for a piece of used exercise equipment might be to a veterans’ rehabilitation organization, and an old musical instrument might be put to best use in a school or house of worship.

“As a best practice, visit an organization’s website or give them a call before donating physical items to ensure you are aware of any restrictions or requirements they might have concerning your donation,” Begun says. “This will help ensure your generosity does not go to waste.”

Speaking of waste, keep in mind that the giving of goods is actually a form of recycling, so giving your unwanted items a second home (rather than just throwing them away) helps the planet, too.

Also, if you plan to claim your donation on your taxes, make sure you keep records. You need a receipt from the charity to write off the gift—putting items into the bin at the local grocery store won’t do it.  Additionally, if you’re giving away items of over $500 in value, you may need an appraisal. “The IRS may ask to see detailed records supporting noncash donations if your return is selected for examination. Keeping detailed records of how you determined the fair market value of your noncash donations is essential to sustaining your contribution deductions if you are audited,” Begun says.  

You Should Consider Giving Money If …

Rather than asking yourself where you want to donate money, begin instead by asking, “What do I want to accomplish?” Begun suggests. The more precisely you can answer this question, the more likely your efforts to find the right cause will prove successful.  

Often charities are more readily able to use monetary donations than they are material goods. For example, in the aftermath of a natural disaster, a charity needs the ability to fluidly provide victims with whatever they may need in the moment—for some families, that’s a warm meal, for others, shelter or even a bottle of shampoo. Whatever the need, money allows organizers to go with the flow and purchase all manner of goods or services. Monetary donations also don’t require processing or sorting as do material things—the impact can literally be seen overnight.

But don’t forget there are myriad ways to give money, encourages Nora Yousif, Certified Financial Planner and vice president at the Williams Investment Group. While donating cash is fine, a tax-optimal way to donate may be via an appreciated stock.  “The beauty there is [you’ll] avoid capital gains taxes [when donating to a tax-exempt 501(c)3 organization,]” she says. In other words, gifting stocks to a charity can be a much more tax-efficient way of accomplishing your philanthropic goals, says Kathleen Kenealy, managing director and senior wealth advisor at financial services firm Boston Private.

Still, whenever you give money, make sure not to get carried away. While money can be an excellent way to fund a cause you’re passionate about, you should give plenty of thought to exactly how much you can afford to give. In other words, make sure you’re not compromising your own savings goals before you write that check,  Kenealy says.

You Should Consider Giving Time If …

Volunteering your time can be one of the most rewarding forms of philanthropy—you may get to meet the people you’re helping directly and witness the impact you’re making firsthand. “The human aspect of working at a soup kitchen, traveling to perform services or offering support for cities that have faced a hardship can be fulfilling, and create lifelong lessons and memories for a family,” Feldman says.

Additionally, when you volunteer your time, you stand to learn new skills and grow your understanding of a particular industry or cause—in this way, volunteering your time can be an excellent resume-builder. And because there’s usually a social aspect to the giving of time, it can be a great way to make new friends and bond with old ones.

Before you commit to volunteering, remember that time is your most valuable asset, Begun stresses. “Take stock of how much time you can realistically commit. Then, speak with someone at the organization to ensure it’s a good fit for both you and the organization in terms of mission, skill set and impact goals.  This will help ensure you have a positive experience and that the charity is able to effectively benefit from the generosity of your time.”

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