My Principles for Charitable Giving

During the winter holiday season, people talk a lot about giving and charity. This a good thing; I’m glad that people can channel this spirit of generosity into doing good for their communities. That being said, I sometimes find myself going against the grain of the usual calls to action, and I wanted to share some of the reasoning behind this.

Giving Year-Round

I give year-round to the organizations I support. Normally I set up an automatic monthly donations, which many organizations offer as an option on their website. People’s needs don’t end with the holiday season, so it’s important that charities have funding throughout the year to do their work.

A similar principle applies to disaster recovery. In the wake of a disaster, there is often a wave of donations to help in recovery efforts. However, this wave recedes quickly as the news moves on, even when affected communites are still recovering. Aside from that, there are many things that don’t make the news but nonetheless could benefit from charitable donations.

I try to contribute to charities that serve a broad range of needs, because they can do good work year-round even without any headlines. I also make sure that my money goes to organizations as whole, rather than specific initiatives, so that the organizations can allocate funds to other initiatives which may receive less attention.

Money Over Goods

I normally donate money as opposed to goods like food and clothes. When it comes to humanitarian causes, this is a common recommendation.

There are several good reasons for this:

• Money can be spent where it is needed most, whereas an excess of goods may be wasted
• Donated goods require time and effort to organize and transport, whereas money can be used more efficiently to purchase goods
• The particular goods donated are not necessarily appropriate for the situation

Overall, donating money gives charities flexibility in how they allocate resources, and I trust them to do this better than I can. You can read more about this from Feeding America and Good360.

This is not to say that charities won’t accept donations of goods at all, but if you do want to donate goods you should first check with the organization about what in particular they need.

Some Ways of Giving Are Better Than Others

I try to donate to organizations that will use the money well. There are lots of organizations that claim to do good, but some do more than others.

First, there are organizations that seem like outright scams. The ones that come to mind for me are the police-related PACs that I got tons of robocalls from a few years ago. These claimed to be advocating for law enforcement, but the vast majority of funds went to telemarketing firms.

Then there are organizations that aren’t scams but may not use funds as effectively as others serving the same cause. For example, Kars4Kids spends a large chunk of its money on overhead (fundraising and administrative costs) and primarily serves children of a particular faith in a particular region of the US. Contrast this with a charity like Save the Children, which spends a larger portion of donations on its programs and serves children around the world.

Other organizations may do good work but have ample reserves, and so they may not need extra funds as urgently.

Finally, there are organizations that represent a better “value for money.” GiveWell is a research organization dedicated to identifying such high-value programs. These programs focus on improving health in developing countries because they cost less and are easier to quantify in terms of impact on people’s lives (explanation of GiveWell’s selection criteria).

This all depends on personal values and some of it may be controversial. But I think everyone should think critically about what charities they support.

Tax Deductions Aren’t a Big Deal (Until Now)

First, let’s be clear on what tax-deductible means. In the US, this applies to donations to certain charities, known as 501(c)(3) organizations. When a donation is tax-deductible, people filing their income taxes can subtract the amount they donate from their taxable income and therefore pay less tax.

That’s the theory, at least. In practice, though, it hasn’t mattered all that much to me. This is because taxpayers need to itemize deductions to take advantage of this, instead of taking the standard deduction. Generally, it only makes sense to itemize if the total deduction would be greater than the standard deduction, and this has almost never been the case for me. So I don’t itemize, which means I can’t actually deduct those donations.

This is going to change starting next year: Beginning in 2026 (for filing in 2027), taxpayers can deduct $1000 (or $2000 for joint returns) when they take the standard deduction. This means more people will need to check if their donations are tax-deductible.

There are some other situations where tax-deductible donations matter, such as donor-advised funds and qualified charitable distributions (QCDs) from IRAs. Also, a few states have special provisions that allow for deducting charitable contributions even if they take the standard deduction.