*Cash donations to eligible nonprofit organizations are generally deductible up to their full value.
Depending on the recipient, the deduction a donor may take on his taxes may be limited to 30% or 50% of his Adjusted Gross Income (AGI) and may be carried forward for five years.
When you think of donating, the most common things that probably come to mind are donating things you "own": your money, your old clothes, books … things like that. You can also donate your time, which is something else that you don't necessarily own but that you have and that is separate from your physical self. What about things that are or have been a more connected part of you? These, too, can make a world of difference to people in need - particularly people suffering from long-term or terminal illnesses.
Donating blood helps people every day, and can be particularly important during times of emergency. Bone marrow donations can significantly help cancer patients and others suffering from chronic and terminal diseases. Though it means facing your own mortality, designating yourself as an organ donor is another way to help people that would persist, should anything terrible ever happen to you. Most simply and painlessly (physically, at least), you can donate your hair for use in making hairpieces for children suffering long-term medical hair loss.
A donor advised fund (DAF) is a charitable giving vehicle in which an individual or family makes a permanent contribution of personal assets to a public charity. Donors then advise the charity on how to use those funds.
Donor Advised Funds provide an immediate tax deduction and maximum tax benefit, while also enabling the donor to have ongoing and flexible involvement in how the monies are used. Talk with your financial advisor and charities to which you would like to make a significant contribution about whether a Donor Advised Fund is a realistic and helpful way for you to give.
Supporting Organizations operate like private foundations, but with the tax benefits of public charities. A Supporting Organization offers individuals and their families the opportunity to have a unique charitable identity, as well as involvement in the investment and distribution of charitable funds.
For more information on establishing a Supporting Organization, talk with your financial advisor. Also, you can visit the National Philanthropic Trust (www.nptrust.org) for more information.
You may donate virtually anything (from clothes to books to vehicles to furniture) and receive a tax donation up to the fair market value of the item, if the item will be used to advance the mission of the receiving organization. If the asset is not related to the charity's mission, the deduction is limited to the amount for which the charity is able to sell the item.
*For more information on donating vehicles, which had specific rules governing deductibility laid out by the IRS in 2005, please see http://cardonation.lifetips.com.
Under US tax law, it is possible to set up charitable trusts that can provide you with a way to give to charity while also procuring significant tax benefits for yourself and your heirs. Charitable Remainder Trusts (CRTs) and Charitable Lead Trusts (CLTs) but do not qualify as exempt under IRS 501(c)(3), but do offer significant tax benefits.
Charitable Remainder Trusts pass the remainder of the assets held in trust to a designated charity upon the death of the grantor or one or more beneficiaries. Holders of such trusts can take a tax deduction for the portion of the trust's assets that is expected to be paid to a charity in the future. The Charitable Lead Trust is essentially the reverse of a Charitable Remainder Trust: payments are made from the trust to a designated charity throughout the grantor's lifetime, and the remainder of those assets returns to the donor's estate or other beneficiaries upon the grantor's death.
Typically understaffed and overworked, nonprofit organizations often survive on a backbone of volunteers. Donating your time and skills to an organization provides much-needed labor to nonprofit organizations and gives you an opportunity to see the organization first-hand and become involved on the ground level.
You can deduct expenses related to volunteering, such as mileage, fares, tolls, et cetera, but you are not able to deduct the value of your donated time.
Gifts of appreciated securities are generally fully deductible at their market value, though the deduction a door may take is limited to 20% or 30% of his Adjusted Gross Income (AGI), and may be carried forward for five years.
Appreciated assets donated to charity are not subject to capital gains tax. Therefore, a gift of securities of gifts of stock to charity will save a donor capital gains tax, provide a tax deduction for the donor, and will provide the recipient with the market value of the appreciated assets.