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Charitable giving: Leverage your giving
Turn $100 for a worthy cause into $300 by looking into matching funds.
December 22, 2004: 1:10 PM EST
By Penelope Wang, MONEY Magazine

NEW YORK (MONEY Magazine) - Giving, say, $100 to a worthy cause is good. Turning that hundred bucks into a $150 or $200 donation without contributing more from your own pocket is even better.

One of the easiest ways to leverage a charitable gift is to get your employer to match it. Some 8,600 companies offer a matching grant program, often kicking in a dollar or more for every dollar their employees donate. Check with your human-resources department to see if your workplace offers this benefit or might institute such a program.

Another way to get a bigger bang for your charitable buck is to invest in a donor-advised fund, an increasingly popular way of giving. New accounts in these funds -- sponsored by Fidelity, Vanguard, T. Rowe Price and other fund groups, as well as many community foundations -- rose by 9 percent last year, bringing total assets to $11.3 billion.

With a donor-advised fund, you contribute a set amount of money (usually at least $10,000) to a fund that invests in stocks and bonds, just like in an ordinary mutual fund. You get an up-front tax deduction for the amount you invest in the year in which you make your contribution.

At your direction, a portion of that money will then be donated to charities of your choice, while the rest can continue to grow -- presumably giving you a larger total amount to contribute to charity over time. While you're not legally required to donate a set amount to nonprofit causes every year, most sponsors set their own guidelines to make sure that fund holders continue to give actively.

Don't forget to claim your rightful tax deductions for other charitable giving too. This, of course, is leveraging of a different sort: Every $100 that you donate if you're in the 30 percent tax bracket, for example, will in effect cost you only $70.

When you make a donation, keep a record such as a bank statement or a credit-card receipt, and be sure to get a written receipt from the charity for gifts of $250 or more. You can also claim a deduction for any tangible goods, such as clothes or furniture, that you donate. If you give an item worth more than $500, you will need to file an additional form with your tax return, detailing the donations.

Remember, claiming your deduction is not simply a matter of trimming taxes, but a strategy that allows you to give even more. And giving generously and wisely, after all, should be the goal.

Next: Doing well at doing good »  Top of page




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