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Industry Insights

Consider year-end charitable giving options carefully

Jay J. Freireich is a member of Brach Eichler LLC.
Jay J. Freireich is a member of Brach Eichler LLC. - ()

As we are in our final year-end tax planning mode, many of us are looking to charities to gain a 2014 year-end deduction and also feel good about ourselves.

The choice of a charity can be a particularly daunting task. There are so many to choose from and so many very worthy causes. Many of us are inundated with letters from worthy charities. In fact, the more we give, the more charities send us literature.

Types of charities:

There are different types of charities that qualify for a charitable deduction. Many of us consider religious organizations, health-related organizations and educational organizations, but there are so many other types that qualify, including: animal rights, arts and culture, environment, human services, international and public benefit. From these categories, you may wish to consider large, well-known organizations with proven track records, or you may choose small, local, grassroots organizations. Many of these smaller organizations pride themselves on being 100 percent volunteer and all administrative expenses are paid for by the volunteers. The larger organizations will all have administrative expenses that cannot be avoided. You can check websites such as charitynavigator.org and charitywatch.org, which rate the various charities on a host of categories.

Administrative expenses:

All of the larger organizations must have administrative expenses. Some are better at controlling those expenses than others. Many are run by paid personnel. All of this information is available on websites that review the various filings that are required by Congress to be filed with the Internal Revenue Service each year in order to maintain the charity’s 501(c)(3) status.

Educational associations:

While universities do great services for their communities and many people who graduated from these schools wish to give back to those institutions, if you look at some of the top universities such as Harvard, Yale and Princeton, you will find that the presidents of the charities make nearly $1 million and their investment advisers make even more than that. Some of these schools could, theoretically, stop charging tuition to every undergraduate student for over 100 years and still not run out of money in the coffers.

Check deductibility

Before making a charitable deduction, to ensure the availability of the deduction, you should go on the website IRS.gov and search exempt organizations to be certain that your organization is listed as one that is eligible to receive tax-deductable charitable contributions. The website lists the EIN, full name, city and state and status of organization and can be searched by any category.

Many religious organizations do not go through the process of obtaining 501(c)(3) status, as such process is not necessarily required.

Offbeat charities

Many of us have heard of the major charities: the March of Dimes or the American Red Cross, for example, but there are many small, grassroots organizations to consider. As long as they hold a 501(c)(3) status, the donation will be deductible (certain limitations apply) just like to the giant charities. For example, donations to your local zoological society can qualify for full deduction. Another of my favorites is a local brain research foundation that is run by volunteers only. Just be aware that just because the charity itself is exempt from paying taxes, only 501(c)(3) registered charities offer tax deductibility for contributions to it.

Jay J. Freireich, Esq., is a member of Brach Eichler LLC, where he advises clients on various areas of law including tax, business and financial transactions, litigation and trusts & estates. He has successfully argued cases before the United States Tax Court, New Jersey State Tax Court, the United States Court of Appeals for both the Second and Third Circuits, and has even successfully filed certiorari briefs to the Unites States Supreme Court. Mr. Freireich can be reached at jfreireich@bracheichler.com.

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