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Millennial Money: Be Effective With Your Generosity In 2020

Millennial Money: Be Effective With Your Generosity In 2020

If youre fortunate enough to be able to donate money this year, plenty of causes need your attention.

If youre fortunate enough to be able to donate money this year, plenty of causes need your attention.

In a year like 2020, choosing where to direct your dollars is like picking your favorite child. Should your money go toward nonprofits providing basic needs, organizations fighting for social justice or a campaign to help local small businesses stay afloat? If you prefer donating your time, how do you give back when volunteer events are limited by the pandemic?

Heres a guide to prioritizing your donations, taking advantage of special tax deductions for 2020 giving and using your holiday spending to make a difference.

TAX BENEFITS OF GIVING DURING THE PANDEMIC

Dec. 1 is Giving Tuesday, a day earmarked for generosity during the holiday season. This year, in addition to helping those in need, you may be eligible to receive added tax benefits for your donations.

As part of the Coronavirus Aid, Relief and Economic Security Act, taxpayers who take the standard deduction are allowed an additional deduction of up to $300 for charitable donations made in cash. Previously, charitable contributions could only be deducted if taxpayers itemized.

Taxpayers who itemize can deduct up to 100% of their adjusted gross income for cash donations (up from 60%) made in 2020.

These incentives dont apply to all contributions only those made to qualifying public organizations, which the IRS defines as those that are religious, charitable, educational, scientific or literary in purpose. Contributions to donor-advised funds, nonoperating private foundations and support organizations dont qualify for the deduction.

The IRS website has a tool to look up tax-exempt organizations.

USE YOUR VALUES TO INFORM YOUR GIVING

Choosing which cause to support is deeply personal. If you havent already, make a list of your values and what youre grateful for. This list is the basis for your giving plan that can help you determine which causes to prioritize and which ones you can say no to, says Jeannie Sager, director of the Womens Philanthropy Institute at Indiana University.

Sager says you can also use a giving plan to frame your actions outside of hitting the donate button.

What kind of volunteerism are you doing? What messages are you sending as you retweet or share things on social media? How does that tie into your philanthropy and your values? she suggests asking yourself.

Early in the pandemic, you may have committed small acts of generosity such as buying gift cards to support your local coffee shop or paying your hairstylist when the salon was shut down.

Keep the community spirit going, says Eileen Heisman, president and CEO of National Philanthropic Trust, a public charity that manages donor-advised funds and is based in Jenkintown, Pennsylvania. Im a big fan of small grassroots charities, she says. A lot of everyday neighborhood arts organizations, small ones, are disappearing.

Research by the Womens Philanthropy Institute during the early months of the pandemic showed that organizations dedicated to basic needs and health fared better than those focused on religion, and especially better than those serving all other purposes, such as education, the arts and the environment.

Resources such as Charity Navigator and GuideStar help you research a charitys financial health, tax-exempt status and practices. Your local community foundation website can also give you an idea of nonprofits to support.

We encourage people to give deeply to a few causes rather than spreading money out to many causes, says Grace Chiang Nicolette, vice president of programming and external relations at the Center for Effective Philanthropy in Cambridge, Massachusetts.

Unrestricted gifts are typically the most useful to charities, Nicolette says, referring to donations that dont come with requirements on how the money can be used.

GIVE BACK WHILE SHOPPING

This holiday season, 65% of Americans say the pandemic will have an impact on the way they plan to give gifts. At least, 3 in 10 Americans (30%) say theyll send money or gift cards, and 28% say theyll ship gifts to loved ones they typically give gifts to in person, according to NerdWallets 2020 Holiday Shopping Report.

Around 1 in 8 Americans plan to spend more on charitable donations, and almost 1 in 5 plan on spending less on donations in 2020 than they did in 2019, the report says.

If you cannot set aside money for donations, use your online holiday purchases to give back. Many online retailers make it easy to donate as youre checking out or buying gift cards, such as through the Paypal Giving Fund or Amazon Smile program.

Heisman suggests using apps that round up your purchases and donate the difference to charity. Boomerang Giving, ChangeUp For Charity and GiveTide are some examples.

You can also donate your unused airline miles or credit card rewards to charity, but be aware of the downsides. The charity may not always receive the full amount of your donation and you cannot apply this contribution toward the CARES Act tax deduction.

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This column was provided to The Associated Press by the personal finance website NerdWallet. Amrita Jayakumar is a writer at NerdWallet. Email: ajayakumar@nerdwallet.com. Twitter: @ajbombay.

RELATED LINKS:

NerdWallet 2020 Holiday Shopping Report https://bit.ly/nerdwallet-shopping-report

IRS Tax-Exempt Organization Search https://www.irs.gov/charities-non-profits/tax-exempt-organization-search

Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor

first published:December 01, 2020, 16:33 IST