Everything you need to know about making charitable donations

Making charitable donations or practicing regular charitable giving—either through donating money, goods or time—is undoubtedly a good habit. It's important to give back, particularly if you've achieved success. You can even think of paying it forward, if you like; either way, practicing a little generosity is a great use of your time, energy, and money.

Beyond the sometimes-vague concept of giving back, though, figuring out the details of charitable donations can be a challenge. Are gifts that give back enough? How should you choose a charity? How much should you donate? There's no hard-and-fast rule, but there are some smart expert tips that can help you figure out the right answers for you and your family. Read on to learn everything you need to know about charitable donations.

Are charitable donations tax-deductible?

Yes, charitable giving is tax-deductible, but you'll need some records. Ask for an itemized receipt for any donation of money or goods, even if it amounts to less than the IRS's $250 threshold. If your noncash donation is worth more than $500, you have to complete IRS Form 8283. A noncash donation worth more than $5,000 requires an appraisal.

Before you donate goods, snap a photo of the pile, says certified public accountant Katie Thomas. If you're not sure how much that business suit or dining room set is worth, check the online valuation guides from Goodwill and the Salvation Army.

Save receipts and documents in a designated folder, or use an app like to store receipts in a digital folder that's easy to share with your accountant.

How to choose a charity

Search for national charities on Give.org, run by the Better Business Bureau, to get a look at their financials, including administrative costs and program expenses. "For insight into the effectiveness of smaller, local charities, check with your community foundation," says Phil Buchanan, author of Giving Done Right. You could also try volunteering first. Sometimes just working the water station at a road race can give you a sense of an organization's ethos—think of it as a fact-finding mission.

If you're new to an area and want to donate to a local cause, ask neighbors or coworkers for their favorite places or go to a trusted site, such as GuideStar, which vets charities. Plug in your city and what type of cause you're interested in.

How to be sure you're giving to a reputable organization 

We've all heard the scam stories—the phony appeals for homeless vets, the woman who faked cancer. The best way to avoid being had is to know (a) the person who started the campaign and (b) exactly what the donation will pay for, says Ashley Post, former spokesperson for Charity Navigator, an independent charity evaluator.

As a rule, never give money via phone or email, even if the cause sounds legit. And keep in mind: Contributions aren't tax-deductible unless a qualified nonprofit has organized the fundraising, Thomas says. Use the IRS's Tax Exempt Organization Search to confirm that a charity is eligible to receive tax-deductible contributions.

How to decide how much to give

Just like housing, car insurance and groceries, donations should be factored into your budget. And get in the habit of donating once a month rather than at the end of the year. To maximize your donation, opt out of the incentive gift, like the tote bag or coffee mug.

If a cash donation is a stretch one month, ask the organization if you can donate time or skills instead; you might do IT work for the website or organize a food drive. Remember, too, that you can give goods instead of money.

Should you donate less money to more charities or more money to fewer?

Your money will generally go further if you donate the bulk of it to just a few places, Post says. (No matter how much you give, write a check whenever possible, since up to 5% of a credit card or online donation is often lost to processing fees.) It may help to divide the total sum into percentages of 50, 30, and 20. You could dedicate 50% to one cause that you care deeply about, 30% to ones that you feel connected to but that aren't top priority, and 20% to unplanned donations, like those random requests to sponsor your friend's trivia team at a fundraiser.

Should you donate to a big charity or a small one?

Go with what you think will have the most impact. Some people might give to their local food pantry to directly benefit the people in their area; for other folks, it might make more sense to donate to a national charity working to improve public policies surrounding hunger.

This article was written by Haley Mades from Real Simple and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.