Column: The Focused Student: Educate yourself on year-end gifts

As the year ends there are several things we think about: football bowl games, reflecting on the new year, cleaning up the house, getting everyone back to a routine, and possibly year-end tax deductible charitable contributions.

This is the time of year lots of mailers and reminders about giving come from a wide range of worthy causes. There are nearly two million active nonprofits in the United States, with more than 100,000 of them in California, and you will at times feel as though they all have your name and address on their list.

You probably can’t support them all, so it’s time to narrow the list. Last month we talked about teaching children the art of giving. One of the first things we suggested was discussing your family’s values and priorities. As a family, what do you value most? Is it art, education, a religious institution or environmental causes? Is it homelessness, hunger or a specific disease? Deciding “what” is the first step. Let’s pick education, since most of us will give to our child’s school and our alma mater.

After “what?” comes “who?” In the category or categories you’ve chosen, what organizations are worthy of consideration? Your list might come from mailings you receive, recommendations of family and friends or because you have a prior history or affiliation with an organization. If you want to do some research on an organization, go to www.charitynavigator.org or www.guidestar.org. There you will find a copy of the 990 form, the annual return nonprofits are required to file with the IRS (even though they pay no taxes). While they may not all be current, this lets you see how an organization is spending the money it raises. As a rule of thumb, no more than 25% of what an organization raises should go to fundraising or other administrative costs.

Read the charity’s mission statement and make sure it is aligned with your values. Make sure the organization is financially stable and has a reasonable balance of income sources (program income as well as donations). Evaluate the stability of the organization, the sustainability and quality of the programs and the difference your donation will make. You may decide to be a bigger fish in a smaller pond, or a smaller part of something larger.

You will next want to know if the organization is tax-exempt under IRS code section 501(c)(3), because that determines the tax deductibility of your gift. Most private schools are nonprofits, and many public schools have a nonprofit foundation through which gifts are received. You can determine an organization’s current 501(c)(3) status at https://apps.irs.gov/app/eos/.

There are many ways to give. Cash is the easy and obvious choice, but other options include appreciated assets such as stocks, bonds, property and IRAs. There are planned gifts (making a gift through your estate), charitable gift annuities, charitable remainder trusts, and a number of other methods and means, some of which offer tax advantages but will depend on your personal situation and ever-changing tax laws. It’s always best to consult your accountant or financial adviser.

Finally, consider how often you want to give. Organizations benefit from sustained financial support, so budgeting a monthly or quarterly gift in addition to your year-end contribution will be particularly appreciated. And you may want to budget a little extra for giving during a natural disaster.

Now is the time to not only make a gift to your chosen charities, but to also show your children the importance of careful philanthropic planning.

May your new year be happy and prosperous!

ROBERT FRANK is the executive director of the Hillside School and Learning Center in La Cañada. He holds a master’s of science degree in special education and has more than 40 years of teaching experience. His column appears on the last Thursday of each month. He can be reached at frank@hillsideforsuccess.org.