Top 10 Benefits of Charitable Giving and Donations

The fact that charitable giving can help reduce your tax burden is well known, especially if you’re in a high bracket. But the benefits of giving extend far beyond tax breaks.

Of course, giving can be a challenge – especially when money is tight. After all, your income could just as easily go toward a college savings fund for your kids, a much-needed vacation, or even a new pair of shoes. But whether you’re interested in the tax benefits or have altruistic motives – or a little of both – you can end up getting back a lot more than you give when you donate valuable items, cold hard cash, or even your time to your favorite causes. In fact, the emotional, social, psychological, and financial benefits of charitable giving often outweigh the satisfaction of splurging on yourself or your family.

The Benefits of Giving Things Away

1. Activate the Reward Center in Your Brain
A study by a University of Oregon professor and his colleagues demonstrates that charitable contributions create a response in the brain that mimics one activated by drugs and other stimuli. This response elicits a surge of dopamine and endorphins that are experienced as “hedonic” and rewarding. Charitable giving can feel pleasurable in the deepest parts of your physiology – more so than a night on the town or a new outfit.

2. Improve Life Satisfaction
A German study provides ample evidence that people who give more to others – in both time and resources – experience greater satisfaction in life than people who do not. In fact, communities of people with high levels of giving tend to demonstrate greater satisfaction within the community than groups of people who do not give generously. Essentially, you’re going to be happier in your community if it’s made up of folks who give to one another.

3. Feel Happier
While life satisfaction is one thing, general happiness is another. In a study by professors at the University of Missouri – Columbia and the University of California – Riverside, people who gave to others tend to score much higher on feelings of joy and contentment than individuals who did not give to others.

4. Protect Your Local Community
National safety net programs, such as Food Stamps and disability benefits, can be of great benefit to Americans, but giving to community organizations can provide important local safety nets that guarantee vital assistance during crises and emergencies as well. Community organizations tend to respond faster and more appropriately to the needs of local communities than larger organizations do, and these agencies obtain most of their funding from private donations. Local giving, therefore, provides support for the programs that enhance community well-being.

5. Improve Key Measurements of Your Health
People who volunteer score better on key measurements in overall health, such as resilience during physical activity and blood pressure levels, than people who do not. An article in Consumer Reports indicates that older adults who volunteer their time have improved cognitive function, increased walking speed, increased ability to climb stairs, and decreased rates of television watching than people who do not volunteer. All of these indicators are linked to better health in elderly individuals.

6. Reduce Rates of Stress
The improved happiness and health of people who volunteer and make charitable contributions is likely linked to reduced rates of stress, as well. Researchers at Johns Hopkins University and the University of Tennessee found that charitable givers experience reduced rates of stress and lower blood pressure compared to those who do not give.

7. Induce Civic Engagement
If you’ve found a cause you like to support with donations, it’s usually just a matter of time before you start contributing your time to that cause as well. A hearty rate of voluntarism improves the overall health and longevity of local organizations, so give your money and your time to a cause you believe in.

8. Improve Your Employee Morale
Corporate enterprises give for all kinds of reasons, including an improved public image, increased profits, and tax breaks. And, according to research, individual employees who contribute their time or money to a corporate cause are more likely to report improved worker morale.

Participating in your company’s giving campaigns can make you feel like a part of your corporate team. Employers who want to improve retention and team-building should offer company giving campaigns and volunteer opportunities for employees.

9. Increase Your Community Standing
Generous givers tend to have more influence with their pet projects than others do. For instance, one of the organizations I contract with is far more likely to have generous givers serve on the board than people who aren’t financially invested in the cause. In turn, these board members are in a better position to influence the agency’s decision-making because they have demonstrated their interest and investment time and time again. The more you give to an organization, the more likely you are to influence that organization’s activities.

10. Reduce Your Tax Burden
Finally, and most famously, charitable contributions can reduce your tax burden at the end of the year. If you’re itemizing your tax return, you can report the dollars you contributed to charity for a deduction in your taxable income. Even if you’re short on cash, you can donate unwanted items to charity (such as clothing, furniture, and vehicles) and claim the value of these goods as a deduction.

For instance, if you make $70,000 annually and contribute $7,000 (or the equivalent in unwanted items) to charity, then your taxable income is reduced to $63,000 on an itemized return. This can add up to a substantial savings, especially if you’re in one of the higher tax brackets.

9 Positive Effects of Donating Money to Charity

According to a report recently released by Atlas of Giving, after a stellar year of charitable donations in 2014, the outlook for this year is less than robust. In fact, U.S.-based giving could decrease by as much as 3.2% for a variety of reasons—including rising interest rates, a possible stock market correction, and continuing decline in employment compensation. But just because certain economic factors may have an impact on giving, this doesn't mean that you should put off your own charitable efforts. You might be surprised to learn that, ultimately, it might be you who reaps some of the best rewards of your donation. Here are nine positive effects of giving to charity.

1. Experience More Pleasure
In research conducted by the National Institutes of Health, participants who chose to donate a portion of $100 they were provided enjoyed activated pleasure centers in the brain. Although this experiment was controlled and scientific, it did show that donating money simply makes you feel better, which is something we can all benefit from.

2. Help Others in Need
We don't live in a perfect world, and there's never going to be a perfect time to give—but there are always people out there in need of help. Whether interest rates are rising, the economy is in the doldrums, or even if you're experiencing financial difficulties of your own, the reality is that when you donate your money, you help others who need it.

3. Get a Tax Deduction
If you give to an IRS-approved charity, you can write off donations on your tax return. Certain restrictions do apply, though. To learn more about them, along with whether or not a particular charity has IRS approval, check the IRS website or The Life You Can Save’s fact sheet about tax deductibility. Donating your cash is a great way to reduce the amount of money you send off to Uncle Sam, and for a good cause, to boot.

4. Bring More Meaning to Your Life
When you donate money to charity, you create opportunities to meet new people who believe in the same causes that inspire you. That, and making a real impact on those causes, can infuse your everyday life with more meaning. If you've been stuck in a rut, whether personally or professionally, sometimes the simple act of donating cash can do the trick and reinvigorate your life.

5. Promote Generosity in Your Children
When your kids see you donating money, they're much more likely to adopt a giving mindset as they grow up. I write from personal experience. I've donated money to a variety of charities over the years and have always made sure to inform my eight-year-old son of my efforts. Last Christmas, when he and I were shopping at a mall, he spotted a kiosk for a charity and rather than spending some of his allotted money on Christmas gifts, he asked if we could sponsor a hungry child overseas. We signed up then and there. Do the same with your kids and you might see similar results.

6. Motivate Friends and Family
When you let your friends and family know of your charitable donations, they may find themselves more motivated to undertake their own efforts to give. It takes a village to address issues such as world poverty, scientific advancement, and early childhood education. Stoking passions in the folks around you is a very positive and tangible effect of your own giving.

7. Realize that Every Little Bit Helps
You don't need $10,000 to make a difference in someone's life. In developing countries, even just a few U.S. dollars could result in a week's worth of meals for a starving child, much-needed medical attention, and even improved schooling. Don't just think of your cash donation from an American economic perspective. Often that money can go a lot further elsewhere in the world.

8. Improve Personal Money Management
If you set a scheduled $100 donation each month for a particular charity, that can motivate you to be more attentive to your own finances in an effort to ensure you don't default or fall behind in your monthly donations. Anything that gets you to pay closer attention to your bank account is a good thing—especially when it helps those in need.

9. Give, If You Can't Volunteer
This might not necessarily be a positive effect of charitable giving, but if you're too busy to volunteer or otherwise donate your time, giving money is the perfect workaround. Never think that you can't improve someone's life or the world itself if your personal or professional schedule won't allow the time. Writing out a check is a simple way to show you're willing to help others in any way you can.

If you're not sure where to donate your cash, check out The Life You Can Save’s list of recommended charities. With a focus on developing countries and those living in extreme poverty, The Life You Can Save recommends some of the best charities to send your money to in order to have the most impact. Plus, almost all of The Life You Can Save’s recommended charities are eligible for personal tax deductions. Alternatively, you can make a donation directly to The Life You Can Save, which helps its efforts to improve the lives of those in need. Understanding the positive effects of donating money to charity is important—just make sure you have the right people in your corner as you get started.

Do you know of any other positive effects of donating money to charity?

Jay Robertson writes about tips for saving money and finding ways to give more time and money to charities and those in need.

Tax Benefits of Giving

The following is a brief summary of certain federal income tax laws for informational purposes only. We urge you to consult your tax advisor for the federal, state, and local tax consequences of a charitable contribution.

Benefits to You of Giving to Charity

While we believe at Charity Navigator that your primary motivation to donate to charity should be altruism, we also think you should know that great tax benefits exist for those who give. Here are some of the benefits you should know about.

• A gift to a qualified charitable organization may entitle you to a charitable contribution deduction against your income tax if you itemize deductions. 
  If the gifts are deductible, the actual cost of the donation is reduced by your tax savings. For example, if you are in the 33% tax bracket, the actual cost of a $100 donation is only $67 ($100 less the $33 tax savings). As your income tax bracket increases, the real cost of your charitable gift decreases, making contributions more attractive for those in higher brackets. The actual cost to a person in the lowest bracket, 15%, for a $100 contribution is $85. For a person in the highest bracket, 35%, the actual cost is only $65. Not only can the wealthy afford to give more, but they receive a larger reward for giving.
   
• A contribution to a qualified charity is deductible in the year in which it is paid. Putting the check in the mail to the charity constitutes payment. A contribution made on a credit card is deductible in the year it is charged to your credit card, even if payment to the credit card company is made in a later year.
   
• Most, but not all, charitable organizations qualify for a charitable contribution deduction.
  You can deduct contributions only if they are made to or for the use of a qualified recipient. No charitable contribution deduction is allowed for gifts to certain other kinds of organizations, even if those organizations are exempt from income tax. Contributions to foreign governments, foreign charities, and certain private foundations similarly are not deductible. Below, you can view a list of organizations for which your donations can be deducted. All organizations rated by Charity Navigator qualify for charitable status, and you can deduct your donations, subject to certain limitations.
  
  An organization could lose its charity status if it devotes a substantial part of its activities to formulating propaganda or otherwise trying to influence legislation. However, an organization, other than a church, may qualify as a charity and still perform some of these activities by keeping its political expenditures to an "insubstantial" part of its activities. Furthermore, donations to needy individuals are not deductible.
   
• There are limits to how much you can deduct, but they're very high.
  For most people, the limits on charitable contributions don't apply. Only if you contribute more than 20% of your adjusted gross income to charity is it necessary to be concerned about donation limits. If the contribution is made to a public charity, the deduction is limited to 50% of your contribution base. For example, if you have an adjusted gross income of $100,000, your deduction limit for that year is $50,000.
  
  The rules on 20% limits and 30% limits are way too complicated to delve into in this space. If you are giving to organizations other than those mentioned above, first consult with your tax adviser to determine whether these other ceilings will apply. If you give an amount in excess of the applicable limitation to charity in one year, the excess is carried over for the next five years.
   
• Rules exist for non-cash donations.
  If you contribute property owned for more than one year, the value of the deduction is normally equal to the property's fair market value. You have an advantage when you contribute appreciated property because you get a deduction for the full fair market value of the property. You are not taxed on any of the appreciation, so, in effect, you receive a deduction for an amount that you never reported as income.
  
  You should clearly contribute, rather than throw out, old clothes, furniture and equipment that you no longer use. However, bear in mind the condition of your donated goods. The IRS only permits deductions for donations of clothing and household items that are in "good condition or better."
  
  If you bring $1,000 in clothes or furniture to Goodwill or the Salvation Army, make sure that you get a receipt. Never throw such contributions into a bin where no receipt is available. If you are in the 25% bracket, that receipt may be worth $250 in tax savings to you. And remember that the IRS requires a qualified appraisal to be submitted with your tax return if you donate any single clothing or household item that is not in good used condition or better, and for which you deducted more than $500.
   
• Remember to document.
  No deduction is allowed for a separate contribution of $250 or more unless you have a written confirmation from the charity. A canceled check alone is not enough. If the contribution is to a religious organization solely for an intangible religious benefit (annual dues, for example) written proof is still required. All other contributions of cash require the charity to estimate the fair market value of any goods or services given to you in exchange for your contribution.
  
  Starting in 2007, the IRS requires written documentation to substantiate deductions for all monetary donations - including cash. In case of an audit, you must have a canceled check, credit card statement or a written acknowledgement from the charity (showing the charity's name, the date of the donation and the amount given). You will no longer be able to deduct those few dollars you dropped in a charity's collection bucket without a receipt from the charity to back up your claim.

Remember, it's always better to give than receive. The glory of charitable donations is that you give and receive at the same time.

Organizations to Which You Can Give and Deduct Your Donation

Your contribution to every organization that Charity Navigator evaluates is tax deductible. If an organization is not evaluated by Charity Navigator, and you still want to support them, you are generally allowed a 50 percent ceiling on your adjusted gross income for contributions if they are any of the following organizations:

1. Churches and other religious organizations;
2. Tax exempt educational organizations;
3. Tax exempt hospitals and certain medical research organizations;
4. A government unit, such as a state or a political subdivision of a state;
5. Publicly supported organizations such as a community chest;
6. Certain private foundations that distribute all contributions they receive to public charities within two-and-a-half months after the end of the foundation's fiscal year;
7. A private operating foundation which pools all of its donations in a common fund;
8. Certain membership organizations that rely on the general public for more than a third of their contributions.

Vehicle Donation Program

Free Pick Up Service For Any Vehicle

Thank you for considering The Salvation Army CAR DONATION PROGRAM as the recipient of your vehicle donation. When you donate your car, boat, motorcycle, truck or RV to The Salvation Army, you're helping us heal broken lives and assist individuals on the road to recovery. Your used vehicle will help change the road ahead for someone who’s lost direction. Proceeds from the sale of your donated automobile are used to help fund The Salvation Army's rehabilitation programs in your area.

Please call 1-800-SA-TRUCK (728-7825) and we’ll pick up your car, boat, truck, motorcycle or RV at absolutely no charge and provide you with an IRS-approved receipt for your donation. After receiving your information, we will call you within 3 business days to provide you with the stock number assigned to your donation and to arrange for a pick-up time. Your tax deductible receipt will be provided at the time of pick-up and additional information will be mailed after your vehicle has been sold.

» Schedule Your Vehicle Donation Online - Free Towing

 

How Do I Get My Car Donation Tax Deduction?

If your vehicle is operable, it will be auctioned at the monthly Salvation Army online auction. It typically results in a much higher sale price for vehicles compared to sales at conventional car auctions. The price it sells for at auction will determine the amount of your tax deduction, according to new IRS rules. The Salvation Army will mail you the information for your tax records within 30 days of the sale. If your vehicle is not operable, the Salvation Army will make arrangements to pick up the vehicle and you will receive the information for your tax records within 30 days of its salvage.

Car donation

In the United States[edit]

Some critics have claimed that car donations are essentially a tax shelter. However, non-profit organizations in the US have come to rely increasingly upon the revenue from car donations. This type of donation has become increasingly widespread; in 2000, 733,000 U.S. taxpayers reduced their taxes by $654 million.

Tax considerations[edit]

Although advertised as an easy way to dispose of an old car, donors need to fulfill certain post-donation requirements to qualify for the tax deduction,^[1] such as obtaining a written acknowledgment of the car's subsequent sale by the charity,^{[citation needed]} and itemizing tax returns instead of taking the standard deduction.

For vehicles valued at less than $500, the deduction amount comes from the donor's own estimate of the car's value, even if the charity receives less money from its sale. Deductions greater than $500 are limited to the proceeds of selling the vehicle, usually at auction. The U.S Internal Revenue Service advises that starting in 2005:

The rules for determining the amount that a donor may deduct for a charitable contribution of a qualified vehicle, including an automobile, with a claimed value of more than $500 changed at the beginning of 2005 as a result of the American Jobs Creation Act of 2004. In general, that Act limits a donor’s deduction to the amount of the gross proceeds from the charity’s sale of the vehicle.

For vehicles valued at over $500, taxpayers are required to attach the charity's written acknowledgment to their tax return.^[2]

In the United Kingdom[edit]

Car donation schemes in the UK are slightly different from those operating in the United States and only established themselves as a valued source of income for UK charities in January 2010, led by Giveacar – a non-profit organisation.^[3] Operating as a non-profit organisation allows charities to avoid the large overheads created by profit-making car donation companies. In addition, whereas car donation in the US has been incentivised through tax breaks, in the UK there are no such tax benefits to donating your car.

Practices[edit]

Vehicle donations in America are operated in a wide variety of plans, ranging from highly organized and professional-grade not-for-profit, national, or local charities to scrap yards, haulers, tow-truck companies and salvagers who establish programs that may support a charity.^[4] According to Charity Navigator, the guidance of the rating agencies concerning car donation programs, where the charity receives a flat fee for the use of their name by a third party, versus program management by a third party,there are some questionable companies who contract to use a nonprofit’s agencies name and logo to raise funds and then just give them a flat fee unrelated to income or performance. This is frowned upon by rating agencies and the government. However, a percentage return program is viewed positively if the nonprofit receives more than 50% of the generated income.^[5] Programs that engage a third party, but with a "cost maximum cap" involved, such as with national charities like the Society of Saint Vincent de Paul, performance in this area is exemplary, with 70-80% on average being returned to the nonprofit.

Benefit to charities[edit]

Many charities run donation programs. All of them accept car donations, such as Goodwill, Salvation Army and even the American Cancer Society. Many charities will use your car donation directly to transport volunteers and supplies to areas that need help. Some even have their own car lots which sell the donated cars but many have their donations processed through auto auction companies. Many processing companies also collect and sell donated cars and distribute the money to a charity the donor indicates. The processing company typically takes a percentage of the sale value of the car, but these programs allow charities without their own facilities or staff dedicated to fund raising to benefit from vehicle donation programs.

Ideally, donors should also investigate how much money from the sale of the car goes to the auction processor and how much actually benefits the charity's programs, as opposed to its administrative overhead.^[1]