There are several ways in which you can donate, depending on your situation, and the amount of donation selected by you. We will go through each of them, and you can choose the one that suits you the best.
1. Credit Card:
The simplest option to use is a credit card. You can pledge your amount, one time or in multiple installments (you can choose the frequency), and you can just forget about it! The Credit Card payment gateway takes care of the renewals, without you needing to remember anything,
Pros:
a. Convenience: Credit cards allow for easy online or in-person donations.
b. Rewards and Cash Back: Some credit cards offer rewards points or cash back on charitable donations.
c. Recurring Donations: Credit cards can be used to set up recurring donations, ensuring regular support for a cause.
d. Proof of Donation: Credit card statements can serve as proof of donation for tax purposes. Either way, we make sure to send you a donation receipt right away.
e. Ease of processing for the charity: The backend processing for us is much reduced when a credit card is used to donate by a donor.
Cons:
a. Higher processing fees: Charities may incur processing fees when accepting credit card donations, which can be higher than other payment methods like checks or bank transfers.
2. eCheck:
eCheck or ACH transfers mimic the process of writing a paper check. eChecks require the payer to provide their bank account number and routing number, and the payee must authorize the payment. They’re safer than paper checks, as they reduce the risk of fraud and bounced checks.
Pros:
a. Convenience: eChecks allow for easy online donations. You will need to keep your checkbook with you to get the Bank Routing number and Account number
b. Controlled Expense: Easier budgeting, you will know exactly what is being withdrawn from your account and hence no surprises.
c. Recurring Donations: eChecks can be used to set up recurring donations, ensuring regular support for a cause.
d. Proof of Donation: We make sure to send you a donation receipt as soon as the funds arrive into our account.
e. Ease of processing for the charity: The backend processing for us is much reduced when aa eCheck is used to donate by a donor.
f. Lower processing fees: Charities incur lower processing fees when accepting eCheck donations.
Cons:
a. The interface seems a bit harder: Sometimes getting the details through, especially the name on the account (exactly as it appears at your bank) is harder, since we generally tend to forget. But once it is set, this is truly a winner as far as charity donation is concerned.
3. Zelle:
Zelle is a digital payments network that allows individuals to transfer money directly from their bank account to another registered user’s bank account. It is a proprietary and safe network allowing for instant transfer of funds.
Pros:
a. No fee: A clear winner in this respect. No fees means more of your donation goes towards the cause.
b. Instant availability of funds: It is the fastest way to get the funds to a charitable organization.
Cons:
a. Lack of ease of processing: It does not integrate with any of the systems, and hence there is a lot of backend work for us to close the donation.
b. Recurring Donations: The onus if on the donor to ensure that the donations are sent on time, since Zelle will not record automatic donations.
4. Check:
Physical check is the oldest way to mail in your donations.
Pros:
a. Secure and cost effective: No additional transaction fee associated with your donation.
b. Easy paper trail for tracking your donation
Cons:
a. Lack of ease of processing: It does not integrate with any of the systems, and hence there is a lot of backend work for us to close the donation.
b. Recurring Donations: The onus if on the donor to ensure that the donations are sent on time, since a check needs to be mailed everytime to fulfil the donation pledge.
c. Slowest processing speed: Cheque processing can take longer than other payment methods.
5. Stock Donation:
Make a larger impact by gifting stock and donating long-term appreciated securities, including stock, bonds, and mutual funds, directly to charity. Compared with donating cash, or selling your appreciated securities and contributing the after-tax proceeds, you may potentially increase your gift and tax donation.
- Eliminate capital gains taxes and the Medicare surtax, which combined could be up to 23.8%
- Take an immediate income tax deduction in the amount of the full fair market value if you itemize your deductions
- Maximize support to your favorite charities
How does Stock Donation work?
When you contribute securities directly to charity, the receiving organization gains the full proceeds from the sale, and you potentially eliminate capital gains exposure. This win-win could mean more money for the causes you care about. Consider this potential savings example:
- Assume that the Original cost of securities: $25,000
- Federal long-term capital gains rate: 23.8%
- Value of securities: $40,000
| Selling your securities and donating the proceeds | Donating your securities to Charitable organization | |
| Capital gains and Medicare surtax paid on $15,000 – your gains (23.8%) | -$3,570 | $0 |
| Total contribution to charity (after deducting federal taxes) | $36,430 | $40,000 |
| Additional amount dedicated to charity +$3,570 | ||
| Charitable donation deductions you can claim on your taxes | $36,430 | $40,000 |
Here’s a handy calculator for you to calculate savings and see if the stock donation makes sense: https://www.fidelitycharitable.org/tools/asset-donation-calculator.html
Pros:
a. No taxes or fees: When a charitable organization receives a stock donation, they sell it. However, being a tax exempt organization, they do not pay taxes on the sale. This is a win-win situation for both the donor and the charity. No transaction fees means more of your donation goes towards the cause.
b. Potential tax savings for the donor: The donor can take a deduction of the full current market price of the securities, potentially adding to the tax benefits**.
Cons:
a. Lack of ease of processing: It does not integrate with any of the systems, and hence there is a lot of backend work for us to close the donation.
b. Recurring Donations: The onus if on the donor to ensure that the donations are sent on time, since stocks need to be transferred to fulfill one’s pledge.
6. Donation via Charitable Foundation:
Donating to a charitable foundation via a Donor Advised Fund (DAF) allows donors to make a tax-deductible donation, invest the funds for potential growth, and then make grants to charities of their choice over time. DAFs offer a flexible approach to philanthropy, allowing donors to organize their charitable giving, build a legacy, and enjoy tax benefits.
For CMA, receiving a grant electronically or via a physical check has the same Pros and Cons as a physical check. But it has several potential tax benefits for the donor**.
**Please note: Anything shared on this page does not constitute tax advice. For your individual tax situation, please consult a tax advisor.