Industry Insights

A How-to Guide for Vetting Charities This Holiday Season

November 2017
Author:  Gretchen Cliburn

Gretchen Cliburn

Director

Wealth Advisors

910 E. St. Louis Street, Suite 200
P.O. Box 2202
Springfield, MO 65801-2202 (65806)

Springfield
417.866.5822

Every charity you know asks for money during the holiday season. But how should you determine which charities are worthy of your donation? Making a gift to a charity is more than just writing a check. It’s about contributing to organizations that provide solutions to issues you’re passionate about. How can you be sure the organization will use your money in a way you’d want? How do you know they put their money where they say they do? Whether you’re donating money or time, you want to be sure it’ll be used in a manner you agree with. Follow these three guidelines to help increase the effect of your donation:

Determine What’s Important to You
What causes are you most passionate about? There are so many great organizations working to improve our lives. Are you interested in affecting the issues you see every day, right in your hometown? Would you prefer to consolidate your funds and attack a root problem that might help people across the globe? Use tools on the internet, talk to people you know and contact your local community foundation to locate charities that work to fulfill the same missions you’re passionate about. 

Research Charities
Once you’ve identified several charities, dig under the hood. There are several websites that can provide additional information. Two of those are Charity Navigator and GuideStar. If you want to receive a tax benefit from the donation, use the Exempt Organizations Select Check tool on the IRS website to verify the organization is eligible to receive tax-deductible charitable contributions.  Understand its goals and how it manages finances. Different types of charity work will have different operating costs. Compare those to similar organizations to see if they’re in line with reasonable expectations for overhead. 

Contact Charities Directly
Ask them to tell you more about their intent and the effects they’ve had. Examine their finances. Reputable charities will have no problem being transparent. Find out if they’re able to accept appreciated securities for a more tax-efficient gift. Many charities will let you identify a specific fund within the organization that you can designate for your gift if desired. 

Once you’ve done your homework and have identified a charity or charities you deem worth your money or time, consider your gifting options. Work with your CPA and financial advisor to identify how to make your gift, e.g., volunteering, writing a check, using appreciated stock, making a qualified charitable contribution from your IRA if you are older than 70½ or using a donor-advised fund (DAF). If you want to gift to multiple charities and will use appreciated stock, then a DAF may be your solution. You can donate your appreciated stock with the highest gain into the DAF. Depending on your tax situation, you may receive the tax benefit in the year you make the gift. Then you can distribute the principal and/or growth from the DAF over time to as many different qualified charities as you choose.

As you consider charitable gifts during the holiday season or any time during the year, keeping these three guidelines in mind can help you be confident your gifts are being used well. For more information or if you have additional questions, please contact us.

BKD Wealth Advisors, LLC is an SEC registered investment adviser offering wealth management services for affluent families and investment consulting services for institutional clients and is a wholly owned subsidiary of BKD, LLP. The views are as of the date of this publication and are subject to change. Different types of investments involve varying risks, and it should not be assumed that future performance of any investment or investment strategy or any noninvestment-related content will equal historical performance level(s), be suitable for your individual situation or prove successful. A copy of BKD Wealth Advisors' current written disclosure statement is available upon request.

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