Personal Finance

How to make the most of your charitable donations

Key Points
  • Charitable contributions are on track to reach a record high in 2017.
  • Here's how to make the most of your donation dollars.
Donation dollars
Donation dollars

Americans are getting into the giving spirit.

Of course, donations generally pick up as the holidays approach. About 40 percent of all donations are made in the last few weeks of the year, according to nonprofit rating site Charity Navigator.

And 22 percent of American adults say they are giving more to charity in 2017 than they did last year, according to a recent report. Only 12 percent said they are giving less.

Altogether, charitable giving has increased year over year almost every year since 1976, Charity Navigator said. Last year, it reached a record $390 billion, and this year is on track to surpass even that.

"The pool keeps getting bigger as more and more people get involved," said Rachel Hutchisson, chair of the Giving Institute, a trade association. "Generosity is increasing in America."

Individuals alone gave $281.86 billion to charities last year, an increase of nearly 4 percent over 2015, according to the Giving Institute's Giving USA. The average gift was about $126.

The pool keeps getting bigger as more and more people get involved. Generosity is increasing in America.
Rachel Hutchisson
Giving Institute

All that dough can do a lot of good. But there are tricks to make the most of your contributions and save money at the same time:

Give gifts that do good

One way to save while increasing your charitable impact is to make a donation in lieu of exchanging gifts. Rather than spend money on each other, you can give money to a cause that's important to you, said Ellen Sirull, a senior manager of content at Experian Consumer Services. You can even adopt a family in need over the holidays and provide them with winter staples like coats, and toys and other gifts.

Soldiers' Angels, Christmas Family Adoption Foundation and Families First are a few of the organizations that put such programs together.

Salvation Army bell ringer volunteers William Schmidt (L), who is on his 20th year volunteering, and his grandson Bubba Wellens (R) ring their bells looking for a donation into a kettle outside a Giant grocery store November 24, 2012, in Clifton, Virgina.
Paul J. Richards | AFP | Getty Images

Check into the charity

Before giving a dime, look to see how a group stacks up at rating sites like, or the Better Business Bureau's Wise Giving Alliance. Those sites assess criteria such as how transparent a nonprofit is about its finances and how much of its budget goes toward programs.

In addition, don't click on a link or open an attachment in an emailed or texted charitable pitch, even if it appears to be genuine, Sirull said — and never wire money or send cash. Use a credit card instead, which offers more protection against scammers.

Clean out your closet

If you have gently used items, giving them to someone in need will help others without spending anything at all. For parents, it's an easy way to pass along toys or clothes that your children quickly got tired of or simply outgrew.

Aside from coat and toy drives, libraries, hospitals and homeless shelters often accept donations in good condition.

Alternatively, you can make an in-kind donation to families in your own community through local Facebook groups. In this case, you may not be able to claim the tax benefit, but, based on what you think is important, giving to others in your own backyard may be particularly rewarding, said Eileen Heisman, CEO of National Philanthropic Trust.

Donate while shopping online

As companies become increasingly socially conscious, there are more and more ways to shop and do good at the same time.

For example, Amazon's AmazonSmile program donates 0.5 percent of the cash you spend to a charity you select. Toms supplies shoes, prescription glasses or clean drinking water for every pair of shoes you buy, while Target's Yoobi line helps provide classroom supplies.

Another win-win: Browser add-ons like Gumdrop by Goodshop, which finds and applies coupons automatically at checkout, also funnel a portion of what you spend to your favorite cause for free.

Reap the tax benefit

Donors shouldn't underestimate the opportunity to maximize their tax savings. For starters, any charitable contribution is tax deductible up to 50 percent of your income. With the tax overhaul up in the air, Heisman suggests front-loading some gifts for next year, too.

High-income earners, in particular, would do well to consider a noncash donation — like appreciated stock or part of a required minimum distribution from a retirement account — specifically because of the tax advantages.

Check out the IRS guidelines before giving, and save any receipts for when it comes time to file your taxes, Sirull said. The organization you're giving to should also be able to provide information and documentation to confirm they're a registered 501(c)(3).

Good deeds may be their own reward, but there's nothing wrong with finding ways to sweeten the deal.

"On the Money" airs on CNBC Saturdays at 5:30 a.m. ET, or check listings for air times in local markets.

More from personal finance:
Why it's smart to boost charitable giving this year
How to get in the holiday spirit without going into debt
Reap the tax benefits of charitable donations