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Supercharge Your Charitable Donations

Billie Holiday once sang, "Summertime and the livin' is easy".  With the current economic climate, that's not true for a lot of folks and families struggling to make ends meet and seeking assistance.  At the same time, many of our community nonprofit organizations are being stretched by soaring demand and diminished resources.  Americans are perhaps the most generous people on the planet, but sometimes we need a little motivation. Here are some creative suggestions about how you can help your community and save some tax dollars along the way.

In the most recent survey conducted by GuideStar, more than half of the charities reported a decline in contributions.  Given the nature of the economy, that isn't very surprising.  At the same time, charities are being asked to do more with less. 

Making a donation requires sacrifice and choice.  Eating in instead of out, buying one less latte a week or holding game nights to replace evenings out may free up dollars that can be redirected to support community charities.  But then who can you trust?  Choosing a charity can be tricky.

Only those organizations designated by the IRS as a "501(c)(3)" charity are eligible to receive tax deductible donations.  Even then, how do you know the charity exercises good management and stewardship?  One good place to start is the Quick Link provided below to GuideStar.  On their website, you can access information on 1.8 million organizations to determine their 501(c)(3) status, understand their mission and values, and view their tax returns and other financial information.  You can also go to the website of your local Better Business Bureau to obtain information on local charities.

The easiest and most traditional form of donation is cash, often in the form of a check or a charge to a credit card.  If possible, be sure to obtain a receipt as evidence of your donation.  Even as simple as these donations are, there are ways to magnify their impact.  Check to see if your employer provides a matching program for employee donations.  Find out if the charity you donate to is participating in any matching grant programs, such as the $1 million end hunger giveaway sponsored by The Feinstein Foundation.  Or start your own "challenge grant" by making a donation, and then encouraging friends, family and co-workers to meet your challenge.  In our family, we've started to make donations in the names of our extended family members in lieu of exchanging gifts of marginal utility.

If you are age 70 1/2 or better, you still have the opportunity this year to make outright gifts from your IRA to qualified charities.  While you cannot claim a deduction for the donation, neither are you subject to income, gift or estate taxes on the amount withdrawn from the IRA.  So while you escape taxes, your entire donation benefits your intended charity.  Total IRA gifts of this nature cannot exceed $100,000 for the calendar year.

As a Colorado resident, you have a unique opportunity to make a donation and get most of your money back in federal and state income tax savings.  Follow the Quick Link below to the Larimer County Workforce Center.  At this site is a listing of nearly two dozen Larimer County charities for which you can receive a 25% tax credit to offset your Colorado Income Tax.  Further, a 50% tax credit is available for certain childcare facilities, such as the Boys & Girls Club of Larimer County.  This, added to your federal tax savings, means you can get back as much as 80 - 90% of your donation in tax savings, while 100% of your donation stays in the community.

There are many more and exotic techniques for making charitable donations that are beyond the scope of this article.  The important point, however, is that this is our community and its quality is dependent on how much we want to invest.  Tax savings shouldn't be the tail that wags the dog, but neither should they be ignored. 

Questions?  Give us a call or send us an email.  We never charge for phone calls or email inquiries, especially when it helps our community.

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Loveland, Colorado 80537

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Estes Park, Colorado 80517


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