Although the recession is affecting each of us in some way – commonly through declining home values or job losses – charities and non-profit organizations are being hit the hardest. However, even as everyone is tightening their personal budgets, being charitable is still your best interest as a U.S. taxpayer. In addition to the feeling of knowing you have done something good for a fellow American, you will be able to deduct your donations come tax season.
One of the biggest reasons charities are suffering so much is the obvious decline in donations. As Americans across the country make a greater effort to save money, many are choosing to decrease – and frequently halt – regular donations to their favorite charities. In addition to less personal donations, giant corporations that used to donate millions of dollars per year are being forced to make cuts. Likewise, dozens of small business owners and sole proprietors that also used to make large charitable contributions are cutting back. In fact, the Red Cross is reportedly seeing a reduction in donations by around 30% this year.
As if a decline in donations was not enough, due to massive job losses and home losses, the country has a greater need for charity now then it has in decades. Homeless shelters in some cities are becoming so crowded that they are turning people away. At the same time, those overcrowded homeless shelters are struggling to stay open because of a decline in donations and financial support. The same can be said for food aid programs, blood drive programs, or just about any charitable or non-profit organization you can think of.
As the recession continues more and more charitable groups are struggling. However, even if your income has gone down there are still plenty of ways to remain charitable.
1. Do NOT Spread it Out
A lot of people who are used to donating to multiple charities – but can no longer afford to make large monetary contributions – are hoping to simply make much smaller donations to each charity or non-profit. However, charity organizers say that while making small donations are always appreciated; donating a larger amount to one or two charities will often make a much larger impact.
2. Volunteer your Time
If you cannot afford to help out a non-profit by donating money, then you can volunteer your time. You could deliver foods for a local "Meals on Wheels" chapter, or help out at a food shelter. Although you cannot take a tax deduction for your time, you can deduct any direct expenses you incur as long as the charity you are working with is qualified. Therefore, if you bought gas for your car to participate in a "Meals on Wheels" program then you could deduct it on your tax return. Just be sure to keep the receipts!
3. Business Donations
If you own your own business, or are self-employed, then you can make donations on behalf of your business. This means you could donate any old office equipment you are no longer using, and if your business does free work for a charity then you can consider the time spent working on the project as a donation.
4. Non-Cash Donations
Since most of us are tight on cash because of the poor economy, you can also consider donating non-cash items such as clothes, food, or even a vehicle. Even though the donation is not money, you can still get a tax deduction as long as you get a receipt for the donation. However, the IRS has become very weary of non-cash deductions, so make sure you only claim the “fair market value” of the item donated.
5. Get More People Involved
When it comes to charity the more people you can get to help the better. Gathering your family, church group, or coworkers to help out at a charitable event will make volunteering both more enjoyable and more efficient. You could even speak with your employer, or human resources department, to help organize a company wide donation event.