Tuesday, November 30, 2021, is GivingTuesday 2021, a worldwide day where people are giving not only their money but also their time and kindness, to others—just days after giving thanks.
For nonprofits, GivingTuesday has become one of the biggest fundraising days of the year. If you’re making monetary donations on GivingTuesday this year, there are some factors to consider when it comes to financial planning and taxes, and to how charities can best make use of your money.
What to consider
Changes to the U.S. tax code a few years ago increased the standard deduction, and some organizations worried that charitable giving could decrease as a result, or that people could “bunch” donations into one year in order to itemize and then not donate at all the following year.
Mark Sipos is the tax director at LFG Tax Services. He said bunching itemized deductions can be helpful, but it may not be the best option for most people.
“However, the itemized deduction limit is so high now for your standard deduction, it's really hard to do that,” Sipos said.
Instead, Sipos said, the IRS has allowed individuals $300 off their tax return ($600 for married couples) for charitable donations, even if they don’t itemize.
Another option instead of bunching is a donor-advised fund.
“You can take the full tax deduction when you fund the donor-advised fund in the year that you fund it, so you get one big lump sum, and then it's directed throughout the course of the years following however you want to give it to charitable donations, and it keeps growing internally as well,” Sipos said.
For those who are able to donate a large portion of their incomes to charity, Sipos said you are allowed to give up to 60 percent of your adjusted gross income. This year, he said you can give 100 percent of your AGI.
And for those who do choose to itemize, there are some other tools to get the biggest benefit both on your taxes and for the charity you choose.
“We like to remind people that gifting of appreciated assets like stocks are a great way to give to charities,” Sipos said. “So you might have bought some Apple stock and it's grown and grown and grown, and then now you can gift it. And you get the fair market value as a tax write-off, and the charity takes it, they cash it in and they pay no tax because it's a nonprofit, so it's kind of a win-win for everybody.”
Another tool Sipos suggested for retired people who can no longer itemize because they don’t have the property taxes or mortgage interest they used to have: required minimum distributions.
“If they're over 70 and a half and they're taking their required minimum distributions, you can have those go right from their IRA to your selected charity and you don't pay any tax on that distribution from your IRA,” Sipos said.
He added that it’s also a good time to “give money to friends, loved ones, relatives in need, and they are allowed to gift them up to $15,000 per individual without having to pay any gift tax.”
That amount doesn’t count against their deduction from their estate, Sipos said.
If you want to donate money but want to be sure you’re giving to a reputable organization in good standing, Sipos recommended starting with the IRS website. There, you can also check an organization’s legitimacy and whether an organization that says it’s a nonprofit actually is registered as a 501(c)3 nonprofit, making it tax-exempt.
Consistency helps with planning
At the Greater Cleveland Food Bank, the fiscal year begins in October. That means the first quarter of the year includes November and December, two of the busiest fundraising months, comprising 40% of overall donations to the food bank.
“We’ll get a great sense to know how our year is going to go if we have a great holiday season, then we know we're on pace for the rest of the year,” said Karen Pozna, director of communications for the Greater Cleveland Food Bank. “If it doesn't go quite so well, then we would have plenty of time throughout the year to make up for it.”
Pozna said the Northeast Ohio community has been very generous in supporting the food bank throughout the COVID-19 pandemic. During that time, the food bank has tried to convert some of those individual donors into monthly donors. The consistency allows them to be “as planful as possible.”
The food bank also receives support from corporate donors, federal and state governments, and foundations. Pozna said that diversity of donors helps in planning as well. She said GivingTuesday is an opportunity to raise awareness for nonprofits.
“It's just a great opportunity to be able to give back and support whichever charity you feel most closely related to,” she said.
If you’d like to donate to the Greater Cleveland Food Bank, click here. While one dollar donated to the food bank typically provides four meals, there will be a match happening on GivingTuesday, meaning that each dollar donated provides eight meals to those in need.
Giving during the pandemic changed “for the better”
At the Cleveland Animal Protective League (APL), about three-quarters of the budget comes from donations. The rest, according to the organization’s president and CEO Sharon Harvey, is funded by service and program fees. There is no government, tax, or other public funding.
“GivingTuesday is so incredibly important to us,” Harvey said. “People are generous with us every day of the year, but I think because of the meaning behind GivingTuesday, and that is expressly to encourage the support of charities, people are especially generous.”
Harvey said the APL, which operates on a calendar-year fiscal year, has not noticed an impact from the tax code changes, although it was hard to evaluate during the pandemic.
“Certainly the bunching of donations makes it a little harder for us to plan,” Harvey said. “However, it seemed that with new giving and that, it all has ended up working out in the end.”
She also noted that the APL has seen more people using donor-advised funds, which can help donors “more plan fully continue to be charitable and generous in the face of some changing tax code.”
Harvey said that during the pandemic, “giving changed completely, and, I'm so happy to report, really for the better. People were worried, I think, that vulnerable animals, vulnerable people really needed support, and despite their own worries about their families and personal financial situations, still gave.”
With pandemic precautions still in place, some of the APL’s programs and services were affected even early this year, leading to decreased revenues. Harvey said the charitable giving has helped to offset some of those revenue losses.
“Certainly, generosity at the end of the year is especially high, and that helps set us up for what it is we're going to need to be able to do in the year ahead, although it just starts all over again the following year,” Harvey said. “I think for people to realize that, yes, we're grateful for your year-end giving, we’re grateful for your giving at the beginning of the year, and that every donation you make is helping an animal. It is supporting the work that goes on at the Cleveland Animal Protective League.”
Among the programs the APL operates are its adoption program, Animal Admissions, sheltering, Humane Investigations, fostering, Project CARE, and Second Chance medical care program for “extraordinary medical cases.”
“We have a dog in care right now who was hit by a car and has three fractures that need special orthopedic surgery,” Harvey said. “And we are raising money specifically to try to help Lyla get those surgeries that she needs to find her happily ever after and permanent home.”
People may choose to direct their donations to the Second Chance program or Humane Investigations program. Otherwise, at least for now, the donation is a general gift and will be used where needed most.
If you’d like to donate to the Cleveland Animal Protective League, click here. A donor has agreed to match up to $10,000 in total donations on GivingTuesday.
“We have that generous support from donors who want to do a little bit extra, so you're giving on GivingTuesday can help twice as many animals and have twice the impact,” Harvey said.
“Give in a way that means something to you”
Dan Flowers, president and CEO of the Akron-Canton Regional Foodbank, said GivingTuesday is a big day for the Foodbank, as many people are focused on charitable giving around the holidays.
“I think when you get past Thanksgiving, folks are starting to think about the year-end,” Flowers said. “December starts this week, so certainly for tax purposes, there's a lot of people making considerations around that, and then certainly, I think there's a lot of emphasis on making sure people have enough food to eat during the holiday season.”
Flowers said the majority of the money raised to support the Foodbank every day of the year comes during the holiday season, “so it's tremendously important.”
While he was unsure if this was due to tax code changes, Flowers said 2018 was not a strong fundraising year for the Foodbank, and there was “a lot of uncertainty and anxiety” at the end of the year.
“It may have been the case that folks weren't sure about the charitable giving, and because of that uncertainty, they might have delayed their gifts or something, I don't know,” Flowers said.
However, since the COVID-19 pandemic began, Flowers said they’d seen a “significant surge” in charitable giving, so he wasn’t sure where the baseline was and how tax code changes might have played into that.
“It's not uncommon at all for charities to hear from donors who are thinking about their plans, their estate, their taxes, and stuff like that,” Flowers said. “And they make gifts based on what is advantageous from a tax standpoint and certainly what's best from the charitable standpoint as well.”
Flowers said he is frequently asked by people if they should do a food drive or give money, and his response is, “What means the most to you?”
“Give in a way that means something to you,” Flowers said, adding that you should also “talk with the charity you're considering making a donation to and asking them what's best for them.”
“‘Is an operating gift best for you, is a capital gift? Do you have an endowment? Would you like for us to consider a planned gift in our will?’” Flowers said. “I think charities, as they evolve, now they're able to be more engaged in these conversations, but it all goes back to what means the most to the donor.”
When it comes to bundling or bunching donations, “Charities are required to recognize the entirety of a donation in the year it's given. So if you wanted to give a two-year gift and you told me just today, once I got that documentation, I'd have to book all of it in this calendar year,” Flowers said.
While that would have implications on the outlook and budget for the following year, Flowers said he doesn’t know of a single charity that would say no to a two-year gift, “because a two-year commitment means an awful lot to a charity.”
“It's always my recommendation for people to give in ways that make sense to them, and to engage charities they're interested in supporting about ways that their gift can best be used at that charity and come up with what works best for all parties,” Flowers said.
He mentioned that some donors choose to give anonymously for a variety of reasons and that the Foodbank respects that anonymity, whatever the reason.
“Donors want to be able to support a charity without it being publicized all over town that they're supporting that charity and that's probably for a variety of reasons,” Flowers said. “Obviously, a lot of our donors have a great deal of humility and they're doing it for really good reasons. And then also too, I'm sure, a lot of donors don't want to have every charity in town knocking down their door too just cause they made a gift to one charity they really cared about.”
For GivingTuesday this year, a number of donors have come forward to offer $57,500 in “challenge funds” for the Foodbank, doubling the impact of each dollar, which typically provides four meals and will now provide eight. Click here if you’d like to donate.
In addition to the IRS website, Charity Navigator can be a resource to look into the organizations you want to support, allowing you to see details of a charity’s expenses and its transparency.