During the holidays, it's natural to look back on the year, take stock of your good fortune and think about those in need. The resulting feelings of generosity and holiday cheer may well culminate in searching for—and donating to—a charity.
Indeed, around 30% of annual giving happens in December, with about 10% of all annual donations coming in the last three days of the year.1 Given that Americans gave nearly a half-trillion dollars ($499.33 billion) to U.S. charities in 2022,2 that means an estimated $150 billion is likely to flow to U.S. charitable organizations this holiday season.
But before you donate money, goods or time to a charity, it's important to ensure that the organization is a good match for you and will use your donation wisely—and that you're aware of any tax benefit you're due. These seven tips can help you maximize the impact of your charitable giving.
1. Consider Various Types of Giving
While cash donations are always desirable, there are many other ways you can give back to your community.
- • Formal volunteering. Nearly one-quarter (23.2%) of Americans, or 60.7 million people, served an estimated 4.1 billion hours in formal volunteering for nonprofit organizations in 2021—worth a whopping $122.9 billion.3 There are lots of ways you can give your time, including in-person service work (e.g., in a soup kitchen, hospital or animal shelter), home-based volunteering (such as stuffing envelopes or making phone calls) and lending your professional expertise to a cause.
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- • Informal helping. These are favors—such as yard work, snow shoveling or meal preparation—that you might do for neighbors or others in your community. In 2021, more than half (51%) of Americans engaged in such informal helping outside of an organizational context.3
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- •In-kind donations. More than eight in 10 (81%) donors contribute food, medications, toiletries, clothing or other goods to nonprofit organizations.1
2. Pick Your Passion
If you choose a charity that shares your values, you'll derive more satisfaction from your donation—and it's likelier to inspire a deeper, longer-term relationship. So think about which causes inspire you. Education, healthcare, social services, arts and culture, animal welfare and the environment are all popular issues among American donors, and there are many nonprofits and charities working in these areas that you can choose to support.
And you don't have to go with a national organization. Lots of local charities rely on contributions, and it may feel more personal for you to donate locally.
3. Do Some Research
If you're considering supporting a new cause, it's important to vet the organization to ensure it will put your donation to good use.
Start by verifying that the charity is tax-exempt under Section 501(c)(3) of the Internal Revenue Code, which indicates that all the organization's earnings are used for the benefit of the charity. Then, consult websites like CharityWatch and Charity Navigator to find out the percentage of expenses that go directly to programs versus administrative and fundraising efforts. A good barometer is when you see that at least 75% of its funding is spent directly on the mission. (Just be aware that some newer charities—or those that work on marginalized charges—may not hit this level. If that's the case, reach out to them and ask questions.)
4. Budget and Divide
You may already have a budget dedicated to holiday décor, festive meals and gifts for friends and family, which can give you an idea of how much you can afford to spend on charity. In some situations, you might be able to blend the two, since a donation to a cause the recipient cares about could be a much-appreciated alternative to a traditional holiday gift.
Don't forget that when you give to a charity—even a small amount—it starts investing in you by sending thank-you gifts, news updates and requests for future contributions. All of that adds up and could cost the charity more than it receives if donation amounts are small. So avoid giving a little bit to a lot of causes; instead, consider setting up monthly contributions. As a point of reference, the average one-time gift in 2022 was $121, while the average monthly gift was $25.1
Save some of your donation budget for unplanned events outside the holiday season, such as disaster relief.
5. Maximize Your Impact
Did you know that an estimated $6 to $10 billion in corporate matching gift funds goes unclaimed every year?1 That might be because the vast majority of workers (78%) at companies with matching gift programs are unaware of the perk.1 So be sure to ask your employer if it has such a program, and how to qualify for the matching donations so you can make your gift dollars go further. Many organizations also match donations made on the Tuesday after Thanksgiving and post details on social media with the hashtag #GivingTuesday.
In terms of maximizing your volunteer hours, again consult your employer: 65% of U.S. companies provide employees with paid-release time volunteer programs.1
6. Look Into the Tax Benefits
It's a good idea to touch base with your accountant to find out what effect your contributions will have on your taxes. Will your donation lead to a tax deduction? This knowledge can be helpful in a couple of ways.
First, if you give to qualified organizations and itemize (rather than claim the standard deduction) on your taxes, you can claim a tax deduction of up to 60% of your adjusted gross income for charitable cash donations, and up to 30% for non-cash contributions,4 such as donating household items to a thrift shop.
Also, knowing how much you can deduct may incentivize you to contribute more, since the final “cost" of your donation will be less than the actual amount. Be sure to donate by December 31 if you want to claim the deduction on this year's tax return.
7. Share the Experience
Whether you're collecting items for a toy drive, volunteering at a soup kitchen or donating cash to your favorite causes, get the word out on social media or through your personal networks to spread awareness and encourage others to join in the giving spirit.
As they say, it's better to give than to receive—especially when you make smart choices about your charitable giving. So take a few moments to review the above tips before planning your seasonal donations, and get more joy from the holidays.
Tamar Satov is a freelance journalist based in Toronto, Canada. Her work has appeared in the Globe and Mail, Today's Parent, BNN Bloomberg, MoneySense, Canadian Living and others.
Looking for more inspiration? Find out how one family started a charitable holiday tradition.
Sources/references
1. Nonprofit Fundraising Statistics to Boost Results in 2023. Double the Donation. Updated October 16, 2023.
2. Giving USA: Total U.S. charitable giving declined in 2022 to $499.33 billion following two years of record generosity. Indiana University Lilly Family School of Philanthropy. Published June 20, 2023.
3. Volunteering and Civic Life in America Research Summary. AmeriCorps. Published 2023.
4. Charitable Contribution Deductions. IRS. Updated June 5, 2023.
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