I’ve taken a look at the IRS rules regarding deduction charitable donations in the past and they’re pretty straight forward. The only real change to what was written in the past was the keeping of receipts for cash donations. With the passage of the Pension Protection Act, which mostly governed pensions and ensuring they were adequately funded, came new charitable donation rules for the 2007 tax year.

Big Change for 2007
Starting in January of 2007, you can only deduct cash donations if you have proof: canceled check, credit card statement, or a written receipt from the charity itself. For the written receipt, it must have the name of the charity, the date, and the donation amount written on the receipt. Without one of those, you cannot deduct the donation from your income. So, throwing a few dollars into the Salvation Army bucket is no longer deductible. Everything else is the same with the charitable donation rules.

Cash donations are pretty vanilla, what about all those other work related donation efforts you may be involved in? What it boils down to is that if you donate anything (for cash, you deduct cash; for property, you deduct fair market value), unless it is to an eligible organization, it is not deductible.

Real Life Example
For example, if you “Adopt a Family” and purchase gifts for them, then you are not permitted to deduct the value of the gifts you purchase. If, however, you donate toys to Toys for Tots, you are permitted to deduct the value of the gifts you purchased because Toys for Tots, in your city, is likely an eligible organization. The family, however, is not an eligible organization so you can’t.

So, next year, when it comes time to support your favorite organization (or organizations), try to use a check instead of cash so that you can take at least a little edge off the tax bite come April 15th.

The Pension Protection Act of 2006 has changed the rules a little bit when it comes to charitable donations of money or property. In the past, if your donation was under $250 then you didn’t need to keep a receipt. Now, after the Pension Protection Act, you will need to keep records of all of your cash donations - which means you’ll have to keep a receipt from the charity, a canceled check, or a credit card statement that shows you made the donation. As with all receipts, you don’t mail it with your documents but you must have them in case you’re audited. Every year we like to donate a little bit of money to charitable causes and this year we’ll probably do the same.

As for property, which is something I don’t really do outside of a few books and some older clothes, the rules have been adjusted slightly as well. Now, what you donate must be in “good” condition, though that isn’t spelled out. I think this is really just a crackdown on all the filers who donate ratty old stuff or who claim a lot of $50 donations just to get a few dollars back.

Personally, I keep a folder of my old tax returns and stick any necessary receipts in with them (plus they’re on record with the credit card company) so these changes don’t affect me, but they’re good to know about.

Students at BYU-Idaho are donating their plasma for $20-$25 each time to help defray the cost of gasoline, pretty amazing. In reading more about it on the Red Cross website, the process only takes 20 minutes longer than a regular blood donation and your platelets replenish after 48 hours.

So you won’t have to give your arm, leg or first born for a tank of gas but some platelets will do. Selling critical body fluids for cash just seems a little (a lot) wrong to me.

This was the first year I ever donated anything financially substantial ($200+) to a charitable organization mostly because financial philanthropy wasn’t something instilled in me as a child at no fault of my parents (my father bought a one-way ticket from Taiwan to the U.S. and when asked “What happens if it doesn’t work out?” he responded “It has to.”). I had donated my time to local hospitals, various drives, and naturally some pints of blood but never straight up cash. But in reading an article in the news today, I saw that various health/medical charities received tons of money for research but not as much to fund things like screenings and tests - considered an overlooked “niche.” I was surprised only in that I didn’t even think about it like that.

When I sent a donation to the American Cancer Society (and the Red Cross for Katrina), I wanted it to go towards research… to find a cure for cancer. But as the article pointed out, it’s hard to see the “results” of your donation. The ACS does a great job of explaining what your money funds -

- A donation of $250 funds 83 hours of service at our toll-free National Cancer Information Center
- $1,000 can ease the financial burden of a patient needing lodging near a cancer treatment center
- $2,500 can provide 25 breast cancer patients with support from trained survivors through our Reach to Recovery program

But if you were to take that same money and donate it to an organization offering free screenings/examinations or free lodging or something like that, you know that your money will be used to possibly help identify cancer at an early stage and quite possibly save someone’s life.

A great resource for finding out more about charities is CharityNavigator.org. I highly recommend this resource even though, sadly, I found out that the American Cancer Society is a relatively inefficient organization (however, the American Red Cross is great). But… two organizations I am familiar with have four star ratings: Make-A-Wish Foundation International and Locks of Love (I never heard of them until my girlfriend donated some of her hair to them).

I first read about Kiva on the Business Opportunities Weblog and I fell in love with this idea. Basically, you can lend (or you can donate) money to businesses (micro-business) in a developing nation. Read their about page for more information.

All of the loans so far have been with businesses in Uganda and in the amount of $500 (there are a few $300 loans) but currently there are ZERO businesses in need of funding! Well, if they find some more businesses in need, I hope to lend $100 and look forward to my new life as a venture capitalist.

If you visit KennethCole.com, click on the Cole Pole in the upper right hand corner, Kenneth Cole will donate $1 to amfAR, The Foundation for AIDS Research. I’m not one to believe all those random “Click to donate” sites but I believe Kenneth Cole will stick to their word. Even if you’ve already voted, you can click again to donate a $1.

(Saw this in an half-page advertisement in The Week magazine)

The IRS announced a new plan where an employee can “donate” their sick and vacation days to the relief effort. Essentially how it works is you donate your days (sick, vacation, or personal) back to your company, who in turn makes a cash donation to a qualified organization providing aid to the region. Your employer deducts that from their taxes and that donated time isn’t counted as income. Is this a “better” option than donating money? A little bit better but it’s (basically) the same to you, I’ll explain below.

(read full article…)

Donating your money is really easy, incredibly important, and a responsibility of those who are fortunate enough not to have to worry about where their next meal is coming from, if there will be a roof over their heads, or if all their loved ones are warm and safe. It takes a marginal amount of time and it makes a whole world of difference to someone. In the wake of Hurricane Katrina, it is the duty of every American to help their fellow Americans pick themselves up when they’re knocked down - because you never know when disaster will hit you or someone you love.

Links are directly to that organization’s credit card donation page (where possible):

The Salvation Army:

A $100 donation to The Salvation Army will feed a family of four for two days, provide two cases of drinking water and one household clean-up kit, containing brooms, mops, buckets, and cleaning supplies.

(I chose Salvation Army because I couldn’t reach American Red Cross and the United Way had a processing fee)

American Red Cross: Site is available now!

United Way: Minimum is $10, but it’s subject to a “$1.50 + 2.25% transaction processing fee.”

Thank you.

Update: Here are details about some of the scams going around concerning this tragedy, read it and make yourself aware of the bad folks out there looking to take advantage. Don’t let it deter you from helping and I assure you that the links on my blog are legitimate.