4 Types Of Charitable Giving

Between the bell-ringers in front of stores and calls for help flooding your inbox, you're bound to be asked to make a charitable donation this time of year. It's no coincidence that most nonprofits make a push for contributions during the holidays. Fifty percent of nonprofits receive a majority of their donations in the last three months1, while $48 billion is donated in November and December each year, according to winspireme.com.

The real question for many donors is not whether to give, but how? While you could drop some spare change in a donation bucket and call it a day, that's just one of many ways to support an organization. Here's what you need to know about the different types of charitable giving.

1. Cash

Monetary donations are one of the simplest ways to contribute to a charity or nonprofit. They give organizations the means to respond to challenges in a flexible way.2 Rather than giving actual cash, consider making your donation by personal check or credit card,3 which makes it easier to document your donations, according to USAGov.

When you make a donation, you might be asked to turn your annual gift into a monthly contribution. Making a recurring donation can provide more sustainable support to an organization, ultimately giving them greater stability throughout the year. Plus, a monthly gift can be easier on your budget and help you be more generous.

2. Stocks and Securities

Many nonprofit organizations accept stocks, bonds, mutual funds and other securities as donations. This typically involves giving ownership of your securities to the nonprofit as a "transfer in kind."4

You'll need to get in touch with the charity you'd like to support to ask for instructions so you can send the securities to the charity's brokerage account. You should also ask the organization about any requests or requirements they have for this type of giving. Some nonprofits5 request that you give them a heads up about the stock gift after the arrangements have been made so they can keep an eye out for it in their account and send you a receipt.

Consult a tax professional or financial advisor to learn about any possible tax benefits of donating stocks and securities.

3. Planned Giving and Charitable Trusts

Planned giving offers the opportunity to arrange now for a charitable donation that will be paid in the future. There are several options for planned giving. The simplest is to include a bequest to a charitable organization in your will. Another option is to designate a charitable organization as a beneficiary of your life insurance policy or your retirement plan. You can also plan a gift by making a charitable trust part of your estate plan.

There are two common types of charitable trusts6 to consider: a charitable lead trust (CLT) and a charitable remainder trust (CRT). Both involve placing assets into a trust. With a CLT, a charitable organization of your choice receives cash flow from those assets each year for a fixed period of time, after which the remaining assets can be sent to other beneficiaries. A CRT, on the other hand, works in the opposite way, paying annual distributions to you or other beneficiaries for a set period of time, after which the remaining assets are given to a charity of your choosing.

Regardless of which type you're interested in, you'll need to consult with a professional (such as an estate planning attorney or a financial advisor) to get it set up and complete the annual administration of the trust.

4. Valuable Assets

If you have a car, boat, or another type of vehicle sitting in your garage, consider putting it to good use as part of your annual charitable giving. An organization that accepts a donated vehicle could use it for its own operations (say, a health nonprofit that drives cancer patients to their doctors' appointments), give it to someone in need, or auction it off for cash.

You can also donate other types of valuable assets, like artwork, jewelry, real estate and patents.3 Charity Navigator recommends finding a local charity that accepts noncash contributions, so that the cost of transporting the item7 does not chip away at the overall value of your donation. You may need to get an expert appraisal to determine the value of these items.