Cash Charitable Contribution Considerations

With the beginning of fall comes another season, one filled with holidays and festivities and cheer. It is also during this time that charities ramp up their fundraising efforts. In fact, according to Charity Navigator (July 2018), a charity-rating/due diligence non-profit, “nearly one-quarter of Americans report making the majority of their charitable gifts in the last quarter of the year, particularly in the weeks between Thanksgiving and New Years Day.” As the season of being barraged with bell-ringers, greeters, advertisements across all of digital media, mailers, and door-knockers begins, here are some ideas to help you think about your own cash charitable contributions.

Have a Plan for Charitable Giving

Having a plan for where and how you contribute to charity can have some major benefits. First, it avoids the socially awkward pause when someone unexpectedly asks you for money for whatever their cause may be, because you already have a donation plan. You can even have practiced a polite declination script such as “I’m sorry, we plan our charitable contributions in advance so while I know your cause is important to you, we’ve already decided what we are contributing toward this year.”

Research Charities So Your Money Goes Further

Doing research in advance helps ensure that you know the organization you are giving to is ethical and will use the money wisely. Just because it is a charity and not-for-profit does not mean it will use the funds well, or in ways you hope they will help people. We highly recommend as a solid starting point for researching charities that align with your values AND will be excellent stewards of the resources you are giving them.

Know How the Taxes Work for You

Charitable contributions can provide tax benefits, but there are some significant hurdles to consider in both receiving those benefits and ultimately deciding whether or not the tax benefit is worth the planning required to capture.

In 2017, the Tax Cuts and Jobs Act was signed into law, which contained a range of significant changes to the Internal Revenue Code. A key aspect of that law was the doubling of the standard deduction, meaning that people could claim more income as exempt from taxation without having to itemize their tax return. However, that doubling of the standard deduction had an implied drawback – that it essentially doubled the amount of deductions required in order for itemizing to make sense. For a number of households, this meant that while they were able to itemize their tax return for donations in the past, the doubling of that standard deduction meant that unless the donations were considerable in size, no further tax benefit would exist from making them. 

For example, let’s assume that you are single, earning $100,000 per year, which puts you squarely in the 24% top marginal tax bracket. The standard deduction for 2022 is $12,950, and let’s assume that with state and local taxes (SALT deduction) you cap out at $10,000 a year. If you regularly donate $200 a month to a qualifying charity (which would be 100% deductible), you would only have $12,400 of deductions, so you would still take the standard deduction for 2022 and receive no financial benefit from the contribution. 

However, there is an approach you can take that can allow you to take advantage of itemizing. Some households will save their cash charitable contributions for several years, choosing to donate when it allows a substantial tax benefit from itemizing taxes. In the above example, let’s now assume that instead of contributing $200 a month the past three years, you saved the money instead, and then made a lump contribution to the charity this year. You would still be contributing over three years time $7,200, but now once we subtract out the standard deduction, we get the following:

$10,000 SALT deduction + $7,200 charitable contribution = $17,200

$17,200 – $12,950 standard deduction = $4,250

You could now itemize your tax return since you are over the $12,950 threshold, which at a federal income tax rate of 24% would save you $1,020 on your federal tax bill for 2022, plus whatever state income tax would apply depending on your tax home state.

Consider the Balance Between Your Tax Benefit and the Organization’s Needs

One important consideration is that while organizations certainly appreciate lump sum contributions, the organization does need to have funds to operate on an annual basis. Depending on the size of the organization, the dollars you donate may best serve the organization being donated in a more spread out fashion. From a tax planning perspective, this is obviously worse for you, but depending on the organization as well as your own personal factors and feelings, you may ultimately opt to not enjoy the tax benefits from the contribution, either because you believe it helps the organization more to receive the consistent contribution stream, or because it just makes you feel good. You are in fact allowed to do things that just plain feel good, but you should be aware that in doing so, you may be trading off savings that not only could have helped yourself, but could have allowed you to give more in the future to the cause. 

I hope that you have safe and happy holidays with your family and friends as the season comes around once more. If you have any questions about this or any other tax topics, schedule a free consultation and let’s chat about it. Finally, please make certain that you consult a tax professional for advice pertaining to your individual tax situation; this article is only meant to be informative and is not to be construed as a recommendation. 


Charity Navigator. (2018, July 2). Best times to donate to your favorite charity. | Charity Navigator. Retrieved September 25, 2022, from

Internal Revenue Service. (2021, November 10). IRS provides tax inflation adjustments for tax year 2022 | Internal Revenue Service. Retrieved September 25, 2022, from

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