December is generally the peak time for charitable giving. When I work with clients on spending forecasts, I’m often asked, “How much should I be giving to charity?”
Some general estimates are given as an average percentage of adjusted gross income (gross income minus certain adjustments) of 3 percent to 5 percent. Others are based on a percentage of disposable income, which historically has hovered around 2 percent. Many faith traditions suggest tithing 10 percent of income. Charitable giving is a personal decision, and the important thing is that you give what you feel you can afford.
December is also a time for many organizations to solicit donations directly from individuals. The Tax Cut and Jobs Act passed last year reduced the tax incentives for charitable giving. One study predicted charitable giving would drop 4 percent in 2018. This prediction might put more pressure on charities to raise funds.
Charitable solicitations can come in the form of direct mail, telephone or email. These appeals could be legitimate or could be the work of scammers out to take advantage of people’s generosity. Below are some ways to sort through and prioritize multiple requests you might receive to make sure your money is going where it will make the most impact.
Phone calls can be the most problematic because there is an immediacy to the request. Here are guidelines for dealing with phone solicitations provided by the Indiana attorney general’s website:
◗ Ask for information about the charity to be mailed to you.
◗ Don’t be pressured into making an immediate contribution.
◗ You have the right to cancel a pledge for money at any time before making the contribution.
◗ Be careful about solicitors who use police, trooper or firefighter in their name. Before contributing, call your local police or fire department to determine whether they have authorized a solicitation on their behalf.
◗ Beware of any solicitor who wants to send a courier to pick up your contribution. Under Indiana law, a contribution cannot be collected in person or by means of a courier unless the solicitation is made in person (and the collection is made at the time of the solicitation) or the contributor has agreed to purchase items in connection with the solicitation and the collection is made at the time of delivery of the items.
Guidelines for handling email requests include being skeptical if it is an organization you have not supported in the past. Avoid clicking on any embedded links and instead go directly to the charity’s website. The following organizations offer reports and ratings about how charitable organizations spend donations and how they conduct business: BBB Wise Giving Alliance, Charity Navigator, CharityWatch and GuideStar.
If you would like to cut down on unsolicited mail, including charity appeals, go to the Data & Marketing Association website, DMAchoice.org, and register your information. Registration will reduce the amount of solicitations you receive.
If you are concerned about an aging relative being targeted, this might be a way to reduce solicitations. Registration does not apply to organizations you have previously supported. If you no longer wish to support those organizations, you’ll need to contact them directly to update your communication preferences.
I am a firm believer in being charitable. It is also important to recognize that being charitable is bigger than making monetary donations. Being charitable is a combination of time, talent and treasure.
How and to whom you give is also based on whether you feel the need to give many charities a little or to select a cause or two that have a personal meaning and concentrate efforts to make a more substantial impact. Doing research will make sure your gift has the maximum impact.•
Hahn is a certified financial planner with WWA Planning and Investments. She can be reached at 812-379-1120 or [email protected]