Many people make giving back a priority. Whether donating to those less fortunate or contributing to a meaningful cause, technological advances are now making it even easier to pay it forward — and potentially receive a tax deduction in the process.
Donations of cash or securities to qualified 501(c)(3) tax-exempt nonprofit organizations are tax-deductible for most donors. Usually, people are allowed to deduct up to 50 percent of their annual adjusted gross income through cash donations if the charitable organization meets certain criteria defined by the IRS, such as providing a public benefit. As with any donation, keep good records of donations and consult a tax professional to determine the impact of donations on your tax situation.
Through the use of several new technologies, donating to charitable causes is now effortless to users. Whether you are looking to make a substantial contribution or just raise money through daily activities, here are some of the organizations making it a bit easier:
Pledgeling. This app calls itself “the easiest place to donate online,” and it really makes giving to schools, religious causes and charities accessible with the touch of a button; most donations take three clicks or less. Users can donate to a single place, or can browse through a list of charities recommended by the app by name or cause. Donors are able to share their donations with other users and friends, encouraging them to donate as well. In addition, users can promote causes by creating their own donor profile. Pledgeling does not take a fee for providing their services, so the entire donation gets sent to the chosen charity or organization.
Charity Miles. Taking cue from sponsorships for local marathons, this iPhone and Android app uses technological advances to link physical fitness and charity. Users choose a charity of choice and then give the app permission to track the workout using GPS. Through corporate sponsors, a donation is made to the cause based on the type and duration of the activity. Walking and running generates up to 25 cents per mile, and biking up to 10 cents per mile. While this won’t provide a charitable deduction for tax purposes, it’s a great way to make an impact and is suitable for any budget.
Causemo. Causemo takes a different approach when it comes to making it easier for the charitably inclined to support causes in the digital space. Recognizing that consumers spend much of their time online, Causemo offers a digital platform that seamlessly integrates charitable causes into everyday digital experiences such as apps, websites, search and social media. Causemo will launch portion-of-proceeds and direct-donation experiences across many popular apps and websites in late 2015.
If you’re looking to make a sizeable donation, you can donate appreciated securities. By donating appreciated securities, you can avoid paying capital gains tax on gains while receiving a tax deduction for the contribution. Rather than selling appreciated assets, paying the tax, and donating the remaining proceeds, consider gifting long-term securities directly to a public charity. When donating appreciated securities, assets are valued at the fair market value on the date of donation. Donors are typically eligible to deduct up to 30 percent of their adjusted gross income for making this type of gift, although some high-income taxpayers may not be able to deduct the full amount.
Regular donors should also consider a donor-advised fund. When donors establish a DAF, an irrevocable contribution is made to an account, which provides an immediate tax deduction. Contributions grow tax-free and you are able to recommend grants to various qualified charities over time. Donor-advised funds are flexible philanthropic vehicles that can be funded with cash, appreciated securities and even non-publicly traded assets like limited partnership interests. DAFs are a perfect alternative for individuals considering starting their own charitable foundation, as they often provide comparable flexibility and discretion over fund use without the administrative burden.
As with any donation to a group or cause, be sure to do some research on administrative fees or expenses that may be deducted from your donation before reaching the charity. Also, if using an app, be sure you’re comfortable with the terms of the privacy policy and understand how your data will be used and distributed. There are many options for individuals looking to make a larger contribution, most of which carry significant tax benefits. Work with your financial advisor and tax professional to discuss your options.
In the end, it doesn’t matter how you decide to give or in what medium — just that you did.
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How to Donate to Charity on Any Budget originally appeared on usnews.com
