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Financial Education for Everyone

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November 20, 2006

In my family, the holiday season is more than just a time for gift-giving and elaborate meals. It’s also when we make charitable contributions to help others who are less fortunate. My kids get in on the act and we all vote on where to donate our money.

If you’re preoccupied with holiday preparations but still want to make a significant difference in people’s lives, consider these options:

Remember tax deductions. If you itemize deductions on your federal income taxes, you can deduct money and property contributions to qualified tax-exempt organizations, within IRS guidelines. For complete details, go to www.irs.gov/pub/irs-pdf/p526.pdf.

A new federal law called the Pension Protection Act of 2006 changed several charitable contribution rules. For example, beginning in 2007 you must obtain a receipt for all charitable contributions, including small cash donations (like at the church collection plate); also, only donated items in good condition will now be deductible.

Make the most of your donation. We all hold certain causes near and dear, but do some research before writing a check. Go to the organization’s Web site and review its goals, programs it sponsors and how it spends donations. Ideally, at least 75 percent of donations should go directly to programs, versus staff salaries and expenses. Web site www.charitynavigator.org rates over 5,000 of the largest charities according to revenue spent on programs and services, as well as financial strength. While it doesn’t list smaller organizations, you can get a good sense of the kinds of questions to ask them yourself.

Donate airline miles. Many charities accept Frequent Flyer miles on behalf of their beneficiaries. For example, the Make a Wish Foundation estimates it will need over 1 billion miles to grant each child’s travel wishes this year (www.wish.org/help/donate/non_cash_gifts/airline_miles). Look on your favorite airline’s Web site for links to non-profit organizations that accept their miles.

Company-matching contributions. Some employers will match a portion of your donations to IRS-approved non-profit organizations or educational institutions. This is a great way to get more bang for your charitable buck. Check with your Human Resources department to see if this is offered at your company.

Donate your time. Last year, Americans gave a record $260 billion in charitable contributions. But millions of people also contributed precious personal time by cleaning parks, staffing homeless shelters, reading to underprivileged children and countless other causes. Although your time isn’t tax-deductible, mileage getting to and from where you volunteer can be. Besides, contributing your time and effort can be much more rewarding than just writing a check.

Involve your family. There’s an old saying, “Charity begins at home.” It’s never too early to teach your kids the value of generosity. Maybe that means asking them to donate gently used toys to a children’s hospital or mow the lawn for an elderly neighbor. My six-year-old son gets an allowance of 50 cents a week and he’s expected to donate to a nickel to our charitable piggy bank.

Practical Money Skills for Life, a free personal financial management site sponsored by Visa Inc., features many activities for parents to teach their children of all ages about money, including how to instill strong values (www.practicalmoneyskills.com/parents).

Donating your hard-earned money and valuable time is one of the best holiday gifts you can give to your community and to yourself.


This article is intended to provide general information and should not be considered health, legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.