It is estimated that 70% of Americans make charitable donations in some form. It could be yearly donations to their favorite charities or it could be in the form of making a charity the beneficiary of their trust. American Association of Retired Persons (AARP) has some tips for donating to charities:
1. Avoid scams. If you are called on the phone by a charity, ask that they send you printed material so you can authenticate their organization. Be cautious about email solicitations and be aware of names that may sound like charities but in fact are not. If you want a gift to be tax deductible, make sure the entity is a qualified charity you can claim as a tax deduction. Never provide a credit card over the phone unless you have initiated the call. Checks are preferable rather than a credit card and dont use cash.
2. You can get information about a charity such as how much of your donation will go to administrative and marketing costs and how much to the charity’s purpose. In general reputable charities spend less than 35% on administrative costs. Two websites that review charities are Guide Star and Charity Navigator. Charity Navigator evaluates the financial health of over 5500 charities according to organization efficiency and organizational capacity as well as listing their annual revenue and what they spend their donations on.
3. If you are including charities in your trust, make sure to specify whether you want the gift to be used for a specific purpose or for general use. You can also provide that the charity must be a qualified charity and if it doesn’t qualify at the time your death as a 501(c) charity, an alternate charity is specificed or another non-charity beneficiary. Some charities are heavily donated to such as hospitals and universities. Harvard University, for example, has $25 billion dollars in endowments. A less known but still worthy charity may be worth looking into. There are over 1 million charities in the United States alone.
If you would like to incorporate charitable giving in your estate plan, call us. In addition to making charities the beneficiaries of your trust, we also can draft other charitable giving trusts such as a charitable remainder trust or a charitable lead trust or other ways to fulfil your charitable goals.