Barbara O’Neill, Ph.D., CFP®
Extension Specialist in Financial Resource Management
Rutgers Cooperative Extension
You’ve worked hard for your money and invested it wisely by following time-tested practices such as diversification and dollar-cost averaging. At some point, you may decide that you want to “share the wealth” with others by making charitable gifts to non-profit organizations and receiving an income tax deduction if you are able to itemize. For example, a taxpayer in the 25% federal marginal tax bracket who donates $1,000 to a charity and itemizes deductions would have tax savings of $250 ($1,000 x .25) for a final out-of-pocket cost of $750.
Not all charities are created equal, however. Instead, they vary in how they raise funds, operate, and fulfill their charitable missions. Some operate very effectively with low administrative costs while others have been accused of having “administrative bloat.” Below are some tips for smart charitable gifting from University of Missouri Cooperative Extension and the Internal Revenue Service (IRS):
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