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Q&A: Tips on Giving to Charity

EXPECTED READ TIME: 6 MINUTES

There's something transformational about charitable giving. When you donate to groups and causes close to your heart, that turns feelings and ideas into campaigns and initiatives.

Tamara O'Neil taps the transformative power of philanthropy each day. As chief development officer of PenFed Foundation, she spearheads fundraising efforts for a non-profit organization that has provided more than $38.5 million in financial support to veterans, active-duty service members, families, and caregivers since 2001.

O'Neil knows the impact that giving can have, both on the personal and professional level. Here are her tips for changing your life and the lives of others through charity.

Let's start out by talking about research. Before you decide to give to an organization, what research should you be doing?

I always say you have to do your research first. In terms of research, there are some very good first stops. Charity Navigator is a really good one. You can look up the name of the organization on Charity Navigator. That would be the best place to start.

Another good thing is looking at 990s, the tax paperwork that every 501(c)(3) has to file. Within those you can find out how much money the organization spends on fundraising versus programs. That's a really good way to tell whether an organization is using donor dollars properly.

Charity Navigator is an organization that evaluates and rates non-profits based on their financial health, accountability, and transparency, making it easier for you to decide where to give your money.

People who give to charity tend to be happier. They tend to be more successful. It makes you feel good.

When you're doing that research, what are the good signs and what are the red flags to watch out for?

If an organization is spending the majority of what it has coming in on its programs, that's really good. Cost to raise a dollar is also something you want to look at.

For instance, if for every donor dollar an organization receives, 75¢ of that is spent on fundraising and salaries, and only 25¢ of each dollar you're giving is actually going to the charitable cause, that's not an organization you want to spend your money on.

The gold standard is anything above 88¢. Any time 88¢ or more of your dollar goes toward the mission of the organization and not just salaries or fundraising, it's a good charity to support.

Programs are the fulfillment of the organization's mission. If an organization is dedicated to helping veterans, its programs are the actions the organization takes to actually accomplish its mission. For example, building homes for homeless veterans, running a soup kitchen for veterans in need, etc.

One of the most common questions about charitable giving is how much individuals should donate. Is there a general rule for how much of your income you should allocate toward charitable donations?

No, there's no rule. It's really up to individual. The average American donates about 3-5% of their income to charity, but it's dependent on your financial situation and what you're passionate about. Of course, larger donations can make a bigger impact faster, but whatever your income level is, donating is important. Every dollar can make a difference.

In terms of research…find out how much money the organization spends on fundraising versus programs.

Do you have any tips for people who are just starting out with their charitable giving?

Only give if it feels good to you. You can't give everywhere, so home in on those that are most meaningful to you. And then don't just write a check.

When you're giving to charity, you're looking at three things: time, talent, and treasure. If there's an organization that's meaningful to you, look for an opportunity to give your time by volunteering. If you have a skill like bookkeeping or social media, look for ways to get involved by sharing your talents. And then if you're investing your time and talent in an organization, hopefully you'll also be able to make a financial commitment as well.

One trend in philanthropy we've seen is parents getting their children involved in charity. What are your thoughts on making charitable giving a family activity?

Making it a family activity is a really big trend in philanthropy. There's an intrinsic value to giving to charity. People who give to charity tend to be happier. They tend to be more successful. It makes you feel good. So, involving your family helps the health of your family and yourself. I get my family involved each year.

How exactly do you get your children involved? Is it a matter of finding out which causes they're passionate about?

Absolutely. We sit down at the beginning of every year and look at causes that are meaningful to my daughter and to my husband and me. Then we decide as a family how we want to distribute our charitable funds.

If an organization is spending the majority of what it has coming in on its programs, that’s really good.

We're going to quickly shift over to taxes. What do people need to do to claim tax deductions on their charitable donations throughout the year?

First, make sure you save all tax receipts. Every 501(c)(3) that you give to, you should receive a tax receipt for. That's a requirement of the foundation itself.

It's usually by email, so make sure you save all your receipts for charitable contributions. It's really hard for charities when a donor comes back and says, 'Hey, I gave $50 back in December, but I lost my receipt, so can you find it for me.' That's really taxing on the workers of the charity.

Tax laws are always changing. In the last few years, it was really easy to just write your charitable giving off on your taxes, but there are different requirements now.

For more information, visit the IRS online.

Let's talk about the PenFed Foundation. What does the PenFed Foundation do and whom does it support?

The PenFed Foundation is a very unique organization within the non-profit world because PenFed Credit Union pays all the salaries and overhead of the staff. So, the money that goes into the PenFed Foundation really goes directly out to support veterans.

We focus on two areas within our veteran community. We have the Veteran Entrepreneur Investment Program (VEIP) that assists veteran entrepreneurs, and we also assist veterans in their greatest time of need.

With COVID-19, we were the first Veteran Service Organization (VSO) in the country to open a COVID relief program for veterans. In 2017, when Hurricane Irma hit, we were one of the fastest organizations to help veterans who were affected. We also built the Defender's Lodge in California, which helps veterans who can't afford to stay in hotels when receiving treatment at the VA. We give free night stays to many veterans who are receiving cancer treatments.

PenFed Credit Union has been such a great supporter of the Foundation and the veteran community that it makes our organization unique and special.

When you’re giving to charity, you’re looking at three things: time, talent, and treasure.

The Takeaway

The old saying holds true: sharing is caring, regardless of whether you're giving of your time, talents, or money.

If you identify causes that move you, choose credible organizations that serve them, and donate what you can, when you can, you'll be able to help others while experiencing the full benefits of charity.

Quite simply, you can put your passion in action.

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