Giving to a charitable cause is a wonderful idea. Before you reach for your wallet, however, it’s important to make sure you can support organizations you care about in a financially healthy way. That’s where budgeting for charitable giving comes in.
For a deeper dive into your budgeting options, don’t miss our recent blog post featuring a few budgeting strategies that may be a good fit for you.
Charitable Giving During COVID-19
In 2020, as a result of COVID-19, many families found themselves out of work and in difficult financial situations. Last year, charitable giving fell to an all-time low in the U.S. According to Gallup, only 73% of survey respondents reported that they had donated or volunteered time to a cause in the last year. This surpassed the previous low of 79% in 2009, during the Great Recession.
Now, as the economy slowly begins to recover from the impact of COVID-19, many people are looking to resume their donations. If you’re ready to start investing in a cause, now is the time to make room in your budget for charitable giving.
Determine How Much to Give
You can treat nonprofit donations like any regular, monthly expense. Build your budget and account for necessity expenses, like housing, utilities, food, debt payments and your emergency fund. After that, you can attribute excess funds to discretionary spending, like charitable giving.
Keep in mind that even if you can’t give much, many nonprofit organizations can make a big difference using small contributions. Be sure you’re keeping your own financial health in mind when determining how much you can designate toward charitable giving.
Make Charitable Giving Part of Your Routine
When it comes to supporting organizations or causes you care about, even if your financial situation doesn’t allow you to donate regularly, a one-time contribution can make a significant impact. Just be sure to plan ahead to be sure you can give while maintaining your own financial wellbeing.
Similarly, if you’re looking to commit to long-term charitable giving, planning ahead is a terrific strategy. Not only will adding charitable giving to your monthly budget help you to establish a routine – it also means you won’t miss seeing those funds in your bank account each month. Instead of feeling like a financial sacrifice, donating to deserving organizations will simply become a monthly habit.
Set Up Autopay
If you’ve been meaning to start giving but you’re having trouble getting started, then autopay may be the tool for you.
Many banks, including SouthEast Bank, offer autopay as a digital banking option. Simply log into your mobile banking app and create a vendor profile for the organization you wish to contribute to. Then, you can schedule the funds to automatically transfer from your account to the nonprofit on select dates.
The Benefits of Digital Banking
Digital banking tools are designed to simplify everyday money management, and the same goes for budgeting for charitable giving.
If you want to take digital money management a step further, try SouthEast Bank’s budgeting and spending tools. With our free, user-friendly mobile banking app, you can automatically categorize and track your spending and savings goals, then determine how much discretionary income to donate to a charitable cause.
Record Donations for Charitable Giving Tax Deductions
One of the major benefits of charitable giving is the opportunity to claim a tax deduction. You may be able to write off donated goods, like used furniture or clothing, or monetary donations. Here are a few things to keep in mind if you’re interested in charitable giving tax deductions:
Choose a qualifying organization.
In order to be considered for a tax deduction, you must donate to an organization with 501(c)(3) status. Use the IRS’s Exempt Organization Search to confirm that your preferred organization qualifies.
Record your donations.
Be sure to request a tax receipt from your charity of choice if you’re donating physical items, or to save your financial statements if you’re giving a monetary donation. You may even be able to deduct your mileage if you drove while volunteering for a qualifying organization. These can help you recall your charitable giving during tax season and ensure that you have adequate documentation.
Know your maximum deduction.
Even qualifying organizations may have different limits on the donation amounts you can deduct from your taxes. Review the IRS’s website or speak with a representative from your chosen nonprofit to determine the maximum deduction for charitable giving.
Speak with a tax advisor.
While donating to charity is a worthwhile cause, the details may feel a little confusing at first. For questions about your financial situation, speak with a tax advisor.
Bottom Line
Making charitable giving a part of your budget is a terrific choice. By planning ahead, you can help ensure both you and your chosen organization make the most of your contributions.
Note: Links to other websites or references to services or applications are provided as a convenience only. A link does not imply SouthEast Bank’s sponsorship or approval of any other site, service or application. SouthEast Bank does not control the content of these sites, services or applications.
Information contained in this blog is for educational and informational purposes only. Nothing contained in this blog should be construed as legal or tax advice. An attorney or tax advisor should be consulted for advice on specific issues.
