Giving Charitably and Effectively

There are numerous considerations to make with charitable donations, and having good information is critical. Stephanie Allgeyer, CPA with VonLehman’s Ft. Mitchell, KY office, says there are many steps a person or company should take before they put pen to checkbook. “It is imperative that people research organizations on­line and exercise due diligence,” says Allgeyer. “People should know the mission of the organization, how money is spent and whether the organization is a good fit for them as a contributor.”

Yvonne de Calonne, CPA and shareholder with Von­Lehman’s Indianapolis office, adds that there are web­sites online that specifically compile comprehensive lists and information of charities and not-for-profit organiza­tions. Would-be contributors can peruse the sites and see tax forms, breakdowns of where money is spent, mission of the organizations and other users’ ratings and experiences with the organization, among other things.

Most charitable donations may qualify for a tax deduction. “Unfortunately, your time spent volunteering doesn’t have a monetary value, but you may be able to claim any out-of-pocket expenses, like mileage and things bought for volunteer­ing,” says de Calonne.

Allgeyer adds that, for example, if a volunteer for an organization that builds houses needs gloves for that work that they wouldn’t typically need otherwise, the cost can be claimed. Any items donated to a nonprofit company can also be valued and claimed. “A contributor can claim a fair market value for items donated to charities and organizations,” says de Calonne. She adds that the contributor should make lists of what was donated, and high value items greater than $5,000 should be appraised and documented and acknowledgement should be obtained. “It’s very important, for tax deductions, that there is a re­ceipt or a letter of acknowledgement for the gift,” de Calonne says. This documentation is crucial if the contributor can claim the deduction.

Another factor to take into consideration is the admin­istrative time and costs an organization may incur when they receive a gift. So, when deciding whether to make multiple small donations or simply donate one large sum to a single organization, a contributor should consider that every transaction for a not-for-profit company may come with a cost. “When a contributor donates a larger sum to a single organization, sometimes they can have a say in where that money goes, so that’s also an option,” says de Calonne.

Whatever a contributor plans to donate, it’s important to first sit down and properly research the organization, or call a CPA for advice. And, according to Allgeyer, con­tributors should first call the organization and ask about its greatest needs. Many organizations may be in more need of your time or material objects than cash.