How To How To Budget For Charitable Giving Read the Article Open Share Drawer Share this:Click to share on Twitter (Opens in new window)Click to share on Facebook (Opens in new window)Click to share on Tumblr (Opens in new window)Click to share on Pinterest (Opens in new window)Click to share on LinkedIn (Opens in new window) Written by Zina Kumok Published Jun 29, 2021 5 min read Advertising Disclosure The views expressed on this blog are those of the bloggers, and not necessarily those of Intuit. Third-party blogger may have received compensation for their time and services. Click here to read full disclosure on third-party bloggers. This blog does not provide legal, financial, accounting or tax advice. The content on this blog is "as is" and carries no warranties. Intuit does not warrant or guarantee the accuracy, reliability, and completeness of the content on this blog. After 20 days, comments are closed on posts. Intuit may, but has no obligation to, monitor comments. Comments that include profanity or abusive language will not be posted. Click here to read full Terms of Service. Save more, spend smarter, and make your money go further Sign up for Free Whether you’re trying to be more generous with your money or trying to avoid over-giving, charity should be approached like any other expense. By working charitable giving into your budget, you can build a sustainable habit that doesn’t eat into your other finances. Budgeting for charity can be done in a few different ways, depending on your personal preference and financial circumstances. Here are a few options to consider. How to Decide How Much to Give When you fly, the flight attendant will tell you to put on your own mask before helping others. The same wisdom applies to your finances. Before you start donating money to causes you care about, your financial situation should be firmly under control. Make sure you have at least three months of expenses in a savings account and no high-interest debt, like a credit card balance. It’s OK to donate money here and there while you’re paying off debt, but don’t feel pressured to give if your own financial needs are not being met. If you have kids or other dependents, make sure you’re saving for their future as well. Give Every Month Most people get asked to donate around the holidays, but you can give to your favorite organization year-round. Instead of making one big donation, consider doling out a little bit every month. Nonprofits often offer charitable giving on a recurring basis. Every month, the organization will deduct the same amount of money from your bank account or charge it to your credit or debit card. You can include this as a line item on your budget, which may be easier to handle than making a large contribution once a year. Only use this strategy if you can afford to give the same amount every month. If your income or expenses fluctuate, you may be better off donating manually at the end of the year. If you suddenly lose your job or have a major financial emergency, you can contact the organization and ask them to pause your contributions. Double-check that this request goes through correctly and don’t be afraid to call if it doesn’t. Start a Sinking Fund A sinking fund is a savings account with a particular goal. Most people use sinking funds to save for car repairs or future vacations, but you can also use them to save for charitable contributions. If you don’t want to pick one organization to donate to, you can start a sinking fund for charitable giving. Pick an amount you want to save every month and create recurring automatic transfers from your bank account to your sinking fund. When you decide to donate to a particular cause, you can withdraw the money from your sinking fund. This strategy works best for people who feel like they’re always being asked to donate. Having a sinking fund in place means you won’t feel like you’re going over budget just to be charitable. Take a Tax Deduction When you file your taxes, you can decide to take the standard deduction or the itemized deduction. In most years, only those who itemize their deductions are allowed to deduct charitable contributions. For most taxpayers, the standard deduction makes more sense. Pro tip: Use the TurboTax standard vs itemized deduction calculator to decide which is best for you. But when the CARES Act passed in March 2020, it created a new rule dictating that taxpayers who take the standard deduction can now deduct charitable donations. There is a $300 limit for individuals and a $600 limit for married couples. There is no income limit, and anyone who takes the standard deduction can use this deduction. This only applies if you donate money to an organization, which does not include physical donations like clothes or home goods. For example, if you donate $300 worth of clothes and accessories to Goodwill, that amount isn’t tax-deductible. If you write a $300 check to your local homeless shelter, that will be eligible. You can make the gift to one or multiple organizations, and choose to give it in one fell swoop or in increments over the course of the year. To apply the deduction, acquire a record of your donation from the organization. You can either use the receipt from when you first made the donation or the year-end statement. The nonprofit has to be a tax-exempt organization, and you can verify its status by searching the IRS directory. If you donate to an organization not on that list, you won’t be able to deduct those contributions. Crowdfunding sites like GoFundMe and YouCaring count contributions as a personal gift to the recipient, so you are not allowed to deduct anything donated on those sites. Set Aside Windfalls If you’re struggling to find money in your monthly budget, you could allocate part of a windfall to charitable giving. For example, when you get a tax refund, immediately donate a certain percentage of it. You can change the percentage at any time if your goals change! Such as if you’re saving to buy a new house or car. Choose the Right Organization When you donate to a charity, you want to know that your money is going to a reputable organization. Before you write a check, search for the nonprofit on sites like Charity Navigator and Guidestar. These sites investigate both local and national organizations to determine what percentage of contributions they use for their mission compared to executive salaries. Use these resources to decide if a nonprofit is worthy of your money. Buy from Companies that Support the Right Missions If you want to go a step further, try buying from companies that support organizations you care about and avoid companies that contribute to causes you don’t support. This can make shopping a little harder, but it also means more of your dollars will be going toward what really matters to you. Save more, spend smarter, and make your money go further Sign up for Free Previous Post The Best Way To Splurge And Not Feel Bad About… Next Post How to Use a Personal Loan to Consolidate Debt Written by Zina Kumok Zina Kumok is a freelance writer specializing in personal finance. A former reporter, she has covered murder trials, the Final Four and everything in between. She has been featured in Lifehacker, DailyWorth and Time. Read about how she paid off $28,000 worth of student loans in three years at Conscious Coins. More from Zina Kumok Visit the website of Zina Kumok. Leave a Reply Cancel replyYour email address will not be published. Required fields are marked *Comment * Name * Email * Website Notify me of follow-up comments by email. Notify me of new posts by email. Δ Browse Related Articles Retirement 101 Chapter 07: Investing in a 401(k) vs. 403b Budgeting 101 Chapter 03: Managing Living Expenses with a Budget Retirement 101 Chapter 03: How to Create a Retirement Budget Budgeting 101 Chapter 04: How to Create a Budget Saving 101 Chapter 01: How to Start Saving Money Budgeting 101 Chapter 01: What Is a Budget & How to Create One Budgeting 101 Chapter 08: Zero-Based Budgeting 101 Retirement 101 Chapter 11: How to Retire Early Budgeting 101 Chapter 02: What to Include in Your Budget Retirement 101 Chapter 01: How Much Do I Need to Retire?