Reaching out to others in need is as American as apple pie. Putting loose change in a donation bucket to help rebuild after a natural disaster, running in a 5K race for a cause, and providing canned goods to the local food shelter are all examples of charity. Giving is how we show compassion for our fellow man.
Charity usually focuses on short term goals and immediate relief while philanthropy is longer term with a mission. In the story – “Give a man a fish and he eats for a day. Teach a man to fish and he eats for a lifetime.” – giving the man a fish is charity and teaching him to fish is philanthropy.
Philanthropy
Mike Lloyd, community development educator with Ohio State University Extension commented in his recent blog article, “the concept of organized philanthropy strikes many regional residents as foreign . . . something that the Rockefellers or Bill Gates do . . . but not us!!”
While most people cannot afford to donate a new wing to the local hospital, money pooled together for a cause can make a difference for a community. Local charitable foundations provide opportunities to support ongoing projects or establish a donor-advised fund that can be directed to a specific purpose.
Maybe your family can set up a scholarship fund for student artists or a fund to provide mini-grants to schools for special educational opportunities. Using philanthropy to enhance a community creates a lasting legacy.
Giving and Taxes
In addition to helping others, monetary donations can have tax advantages for the giver. According to the IRS, charitable contributions are deductible for taxpayers who itemize deductions. In order to be deductible, charitable contributions must be made to qualified organizations. To determine if the charities you are interested in qualify as tax exempt organizations, use Exempt Organizations Select Check on the IRS.gov website.
As you think about making a monetary donation, consider these questions:
How can I research a charity before donating?
Can non-cash donations lower income taxes?
What paperwork will I need to create a tax deduction?
Do charities charge a credit card fee?
Visit eXtension for answers to these questions and more.
What are the needs in your community? What are you passionate about? One small town has been fundraising to reopen the community pool. There are many ways to contribute money to a foundation. Talk to your tax or financial adviser to find out if a charitable lead trust, remainder annuity, bequest or other of the many giving opportunities is right for your financial plan and future.
