Looking for the Perfect Gift This Season? Consider a Charitable Donation
Giving a charitable donation in a friend's name can be an effective—and even personal—way to put the spirit of giving back into the holidays.
Before choosing a charity, think carefully about what is most important to the recipient and the beliefs and causes that are important to them.
Be strategic about your giving and surprise your friend with both your careful research as well as your thoughtfulness.
Several of my friends and I have agreed to give charitable donations for the holidays instead of physical presents. What’s the best way to do this? —A Reader
What a great way to put the true spirit of the holidays back in focus. Gift giving has become so stressful—and expensive—that the whole reason for giving a gift often gets lost in the rush and worry of the season. So I applaud you and your friends for wanting to share your good fortune with others while at the same time acknowledging each other in a special way.
And your spirit of giving is right in line with the attitudes of many young people these days. Recently, there's been a lot of focus on how Millennials not only want to give, but also how they are changing the giving landscape through social media. I think there's no better example than all the focus on helping victims of the recent natural disasters throughout the county through various crowdfunding sites. In fact, the family of a colleague of mine who lost their home in the California wildfires and who had two funds established for them is a testament to how effective—and appreciated—this type of giving can be.
Because there are so many opportunities to give and different ways to go about it, I encourage you and your friends to think carefully about your gifts; in fact, it's the thought you put into choosing a charity that's meaningful to a person that will make this type of gift truly memorable.
Set some gift-giving guidelines
With this in mind, I suggest that you and your friends set some giving parameters. For instance, are you all going to give gifts to each other or will you draw names? Will you set a financial limit on your gifts, say $50 or $100? Since it's likely that you have different levels of discretionary income, this might make everyone feel more comfortable.
You could also consider buying a small physical gift, as well as making a charitable donation. There's no right or wrong way to go about this, but you should all agree upfront so that everyone feels equally included.
Make it personal—and strategic
It's one thing to write a check to a charity in someone's name and another to choose just the right charity that represents an individual's interests. You won't have to be thinking about what color a friend looks good in, but you can give equally careful thought to their beliefs and personal causes. Is it saving wildlife? Feeding the hungry? A special program for kids or teens? Do they volunteer for a specific organization?
There's so much to choose from and every community has a myriad of worthy local programs on top of the well-known national charities. So you might want to be a bit strategic in making your choices. Well-known Stanford philanthropy professor Laura Arrillaga Andreesen suggests that before you choose a charity you should ask yourself three questions: 1) What change do you hope to make and how will you know it's happening? 2) Is this the biggest bang for your charitable buck? 3) What will you learn from this gift that you can share with others?
By answering these questions and taking the time to research credible organizations (two good online resources are charitynavigator.org and guidestar.org), you can find a charity that's not only meaningful to your friend but also effective. Then, to make your gift more personal, you might write a short note describing why you chose a particular charity for a certain person and what you hope it will accomplish.
Explore different ways to give
Once you have the type of charity in mind, there are a variety of ways to make the donation. There are a number of online charitable giving sites that make it easy to choose from literally thousands of individual charities. Some even offer charitable gift cards that you can personalize and give to a friend who can then choose to "spend" it on a specific charity they want to support.
If you want to make charitable giving a more constant part of your life—and you have the money—you could look into a Charitable Gift Account (also known as a donor-advised fund account) offered by many major financial institutions. It typically takes an initial irrevocable contribution of around $5,000 to open the account, but you are eligible for an immediate tax deduction upon making a contribution. You can then make grants over time to any public charity—including grants made on behalf of someone else. This could be particularly helpful if you plan to make this type of gift-giving a regular event.
Of course you can always write a personal check to the charity of your choice in the name of your friend. Organizations are usually more than willing to provide some sort of acknowledgement that you could then include in a personal card.
And just for the record, if you make certain types of donations or gifts over a specific amount to a qualified charity, it may be tax deductible only if you itemize and keep specific records of the gifts. For example, you need a receipt or bank record that includes the date, amount and name of the charity for any cash donation above $250. There are a few other IRS rules, so it's best to check with your accountant for specifics on tax deductibility.
Keep it a surprise
To me the element of surprise is half the fun of gift giving and you don't have to lose that because you're doing things differently. If you keep your charity choices a secret until you present the gifts, I think you'll have just as much fun surprising each other with your thoughtfulness as you would with a traditional gift. And if you take the time to think it through and do your research, you can feel confident that your gifts will be just the right fit. Happy Holidays!