Charitable donation can be the perfect gift this holiday season

Dear Carrie,

Several of my friends and I have agreed to give charitable donations for the holidays instead of physical presents. What’s the best way to do this?

– A Reader

 

Dear Reader,

What a great way to put the true spirit of the holidays back in focus. Gift-giving has become so stressful that the whole reason for giving a gift often gets lost in the rush and worry of the season.

And your spirit of giving is right in line with the attitudes of many young people these days. I think there’s no better example than all the focus on helping victims of the recent natural disasters throughout the county through various crowdfunding sites.

Because there are so many opportunities to give — and different ways to go about it, I encourage you and your friends to think carefully about your gifts; in fact, it’s the thought you put into choosing a charity that’s meaningful to a person that will make this type of gift truly memorable.

With this in mind, I suggest that you and your friends set some giving parameters. For instance, are you all going to give gifts to each other or will you draw names? Will you set a financial limit on your gifts? Since it’s likely that you have different levels of discretionary income, this might make everyone feel more comfortable.

You could also consider buying a small physical gift, as well as making a charitable donation. There’s no right or wrong way to go about this, but you should all agree upfront so that everyone feels equally included.

It’s one thing to write a check to a charity in someone’s name and another to choose just the right charity that represents an individual’s interests. You won’t have to be thinking about what color a friend looks good in, but you can give equally careful thought to their beliefs and personal causes.

There’s so much to choose from and every community has a myriad of worthy local programs on top of the well-known national charities. So you might want to be a bit strategic in making your choices. Well-known Stanford philanthropy professor Laura Arrillaga Andreesen suggests that before you choose a charity you should ask yourself three questions: What change do you hope to make and how will you know it’s happening? Is this the biggest bang for your charitable buck? What will you learn from this gift that you can share with others?

By answering these questions and taking the time to research credible organizations (two good online resources are charitynavigator.org and guidestar.org), you can find a charity that’s not only meaningful to your friend but also effective. Then, to make your gift more personal, you might write a short note describing why you chose a particular charity for a certain person and what you hope it will accomplish.

Once you have the type of charity in mind, there are a variety of ways to make the donation. There are a number of online charitable giving sites that make it easy to choose from literally thousands of individual charities. Some even offer charitable gift cards that you can personalize and give to a friend who can then choose to “spend” it on a specific charity they want to support.

Of course, you can always write a personal check to the charity of your choice in the name of your friend. Organizations are usually more than willing to provide some sort of acknowledgement that you could then include in a personal card.

And just for the record, if you make certain types of donations or gifts over a specific amount to a qualified charity, it may be tax deductible only if you itemize and keep specific records of the gifts. For example, you need a receipt or bank record that includes the date, amount and name of the charity for any cash donation above $250. There are a few other IRS rules, so it’s best to check with your accountant for specifics on tax deductibility.

To me, the element of surprise is half the fun of gift giving and you don’t have to lose that because you’re doing things differently. If you keep your charity choices a secret until you present the gifts, I think you’ll have just as much fun surprising each other with your thoughtfulness as you would with a traditional gift. And if you take the time to think it through and do your research, you can feel confident that your gifts will be just the right fit. Happy Holidays!•

Carrie Schwab-Pomerantz, Certified Financial Planner, is president of the Charles Schwab Foundation and author of “The Charles Schwab Guide to Finances After Fifty.” You can email Carrie at askcarrie@schwab.com. The opinions expressed in this column are those of the author.

© 2017 Charles Schwab & Co. Inc., Member SIPC

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