Creative Giving in Tough Times
By: Nancy | December 04, 2008 | Category: Money
Usually at the end of the year, people and businesses start thinking about last minute charitable contributions, driven by the holiday spirit or the need for tax deductions. Whatever the motivation, this is typically the biggest time for charities. But not this year. The financial hit that families and businesses have taken recently is translating into a financial hit for charities too. Some nonprofits, like a Boys and Girls Club near Washington, DC could close if things don't turn around. 
I found a great link today on ConsumerAction.gov to a Better Business Bureau article on ways to give creatively when your heart's bigger than your wallet:
Open your closets and your cupboards: Unworn or gently used clothes, toys, household items and extra canned or packaged food are all welcome more than ever at your local thrift shop or food pantry since both places are seeing a lot more traffic during this tough economic time. I went to my local Goodwill last week to buy some books and was astounded by how unusually crowded the place was. Remember to double-check the dates on food packages and make sure the clothes and household items are clean and without holes. Donating stuff that's not in good condition ends up adding costs and wasting time for charities because they have to sort through and dispose of items that aren't in good shape.
Donate a vehicle: Reluctant to try to sell my beloved Jeep on my own and wanting more than anything for it to go to somebody else who really needed it, I donated it to my church a few months ago. In their car donation program, my church gives the vehicle directly to a family in need. The vehicle donor in turn gets to claim the car or truck's Blue Book value. Other car donation programs may sell your vehicle at auction. That auction price—usually much less than Blue Book value—is the amount you get to claim on your taxes. Make sure you know which route the charity you'll be donating your vehicle to will take, so you won't be surprised in the end.
Give the gift of time and talk: Stocking shelves at a food pantry, tutoring a kid, polishing up a jobless friend's resume, running or riding in a jog- or bike-a-thon—whatever your interests or talents, there are people and groups that would be grateful for your time. And if you're an avid blogger, emailer or part of an online community, chatting about your favorite nonprofit organizations is a great way to motivate others to support them. And it doesn't cost you a dime.
How do you support your favorite causes?
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Thanks to this site for the heads up:
http://www.engineeradebtfreelife.com/2008/11/bargain-shopping-at-goodwill-online.html
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I might be wrong about this, but claiming the blue book value for your car was changed at the beginning of the year. My understanding is when you donate a vehicle you have one of two choices. You can claim a immediate five hundred dollar deduction or wait until the place you donated the car to takes it to auction and sells it. Then you can claim the value the car was sold at. The one problem with option is that if the car was sold for less then five hundred dollars you are out the difference between the two amounts.
Thomas
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There are different ways that charities handle car donations and different IRS rules, depending on what they do.
In my case, I donated my car to a nonprofit that gives the car to people in need. No money changed hands. The car was inspected and then appraised using the Blue Book valuing system to help determine its fair market value. Then the nonprofit submitted a form to the IRS, which I was given a copy of, along with a written acknowledgement of my donation. When I go to do my taxes, I'll fill out a special form to claim the deduction.
If a car is donated to a nonprofit that will sell it at auction, if the value of your vehicle is over $500, you will be allowed to claim either the fair market value of your vehicle at the time of donation or the gross proceeds from the charity's sale of the vehicle--whichever is LESSER of the two. So if your car's fair market value is $1,700 but it only goes for $800 at auction, you can only claim the $800 value on your taxes.
The IRS spells it all out in more detail here: http://www.irs.gov/publications/p526/ar02.html#d0e1607
and here:
http://www.irs.gov/pub/irs-pdf/p4303.pdf
Hope this helps, Thomas. And if any of my fellow bureaucrats at the IRS are reading and want to chime in, we'd love to hear from you!
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Thomas
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