Outside the Box: How to give to charity at the end of the year — even if you’re on a fixed budget

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This year, Americans donated nearly $2 billion on Dec. 3, better known as Giving Tuesday. It should come as no surprise that experts predict the giving spirit to be on full display throughout this holiday season, due in part to the strong economy and heightened social awareness of humanitarian issues world-wide.

While this generosity has the ability to transform lives and communities, it is important to be strategic with giving — particularly for Americans who are retired and living on a fixed income.

Read: All the tax-friendly ways retirees can donate to charity

Have a plan

Whether dropping a few dollars in the Salvation Army bucket or writing a check for your niece’s ice hockey fundraiser, “one off” December donations can snowball if they’re not approached thoughtfully. Earmarking funds for both planned giving and spur-of-the-moment or one-time gifts can make a huge difference in sticking to a budget. It’s seemingly simple advice, but making a philanthropic budget and planning for various scenarios around the holidays and throughout the year can both help you maintain your bottom line and improve your confidence when giving away some of your fixed income.

Just like an emergency fund or a rainy-day fund, setting up and contributing to a charitable giving fund takes the guesswork out of how much you have set aside for donations. Consider putting those charitable dollars in a high yield account, which can grow your cash quickly due to a significantly higher APY than traditional savings accounts (~1.5% versus 0.09%). The more your money is put to work, the more comfortable you’ll be donating some of it.

Pay attention to detail

Today’s socially conscious society is creating wonderful organizations to support communities and causes that have previously gone underserved. However, the flood of organizations also creates opportunities for illegitimate players to take advantage of people’s generosity. Even those without devious intentions might not be running organizations where donations are going as far as they can.

Make sure to research an organization before giving a meaningful donation. What numbers can they share that demonstrate their impact? How are board members, officers and employees compensated? What percentage of each contribution is donated directly to the cause? Charity Navigator, a nonprofit dedicated to helping people vet charities, is also a good resource for questions you should consider before making a contribution.

Think ahead to April 15

Donations made before the clock strikes midnight on Jan. 1 have the potential to play a helpful role during tax season. In retirement, navigating taxes for the best possible outcome could be a full-time job. From drawing down a 401(k) to RMDs, retiree finances and tax puzzles go hand in hand. Charitable giving can provide a silver lining. Itemizing deductions and understanding what is deductible, like car mileage and expenses related to supporting charitable organizations, is important. But an often-overlooked strategy is gifting appreciated assets.

Appreciated assets like stocks, real estate or other securities can be donated to a nonprofit. The organization of your choice can receive the full benefit of the asset’s current market value, while you may be able to save significant capital-gains taxes on the appreciation. You may also be able to deduct more than what you paid for the asset, and you won’t have to deplete your cash accounts to make the gift, which can give you more financial flexibility. Helpful online tax guides or a professional can help you navigate this option in a smart, strategic way.

Read: Want to give to charity when you’re on a budget? Here’s what to do

Bypass your wallet

Most people think of financial donations when it comes to charitable giving, whether cash, check or securities. While many of us are still trying to get the Kars4Kids jingle out of our heads, cars are only the beginning in terms of what else can be donated to charities and nonprofits. This nonmonetary approach to donating is particularly relevant for retirees who are downsizing or thinking about what to pass along to their children.

It is well documented that today’s retirees and preretirees came up in an era where possessions were treasured and passed on from generation to generation. However, there is a cultural shift taking place in which those bequeathed items as parents downsize or pass away are not interested in them. From the family armoire or china to a cardboard box of My Little Pony toys and G.I. Joes, there are a multitude of organizations that would greatly benefit from receiving items as donations. An old table might serve as a prop at a local community theater, for example, or gently worn toys and dolls could be enjoyed by children at a local shelter. Limiting donations to cash also limits the ways to support organizations you care about.

This is a season to be generous. Whether writing a check, gifting stocks or delivering goods to an organization in need, don’t lose your own financial wellness in the process. It is absolutely possible to be generous to others in a strategic way that keeps your finances healthy, your confidence intact and your heart happy.

Amin Dabit, CFP, is vice president of Advisory Service at Personal Capital.

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