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Charitable giving has been on the rise as people seek ways to give back to their communities and help those in need. According to Donor Box, 60% of American households that responded donate to charity, with many supporting environmental, animal, and social justice organizations.1
Charitable giving doesn't just impact the recipients, however. There are many potential health benefits of charitable giving for those who open their hearts and wallets. It can potentially boost mental well-being, for example, or help grow a sense of community.
Here, we'll explain what charitable contributions are, examples of charitable giving, and how to reap potential benefits of donating to charity.
Charitable contributions are cash, goods, or property donations made to a nonprofit organization. For a contribution to qualify for a tax deduction, that nonprofit must be officially designated as a 501(c)(3) or tax-exempt organization.
What can be donated to charity, exactly? Here are three common examples of charitable contributions.
Money donations — also referred to as cash donations — are monetary gifts given to nonprofit organizations. These donations can be paid directly from a bank account, credit card, digital wallet, or other online financial provider.
To qualify a money or cash donation for a tax deduction, make sure to have a receipt from the purchase or a bank record of the transaction.
Aside from cash, a range of goods and personal items can be donated to charity, including clothes, household items, artwork, collectibles, antiques, books, jewelry, and even vehicles like cars or boats. For example, someone might donate used clothes to a local youth shelter or an old car to a veteran’s organization.
Ordinary income property includes assets that would have provided income or short-term capital gains if sold on the date they were donated. For example, ordinary income property might include stocks held for one year or less, artwork created by the donor, manuscripts created by the donor, or property used in a trade or business.
There are many possible personal and societal benefits of charity giving. As the Charities Aid Foundation found, 20% of people surveyed who give to charity do so because it makes them feel good.2 Acts of altruism, such as donating to charity, have also been known to increase life satisfaction and positive emotions.
Here's a closer look at the potential health benefits of donating to charity.
Donating to charity can give one a sense of personal satisfaction and growth, possibly improving happiness and self-esteem. As a recent study found, spending money on others can increase feelings of well-being for many people.3
Making even a small donation can start a chain reaction and inspire others to donate as well. Friends, family members, and colleagues, for example, might be encouraged to support important causes and give to their communities.
In fact, many people join up with family or co-workers to make group donations to charity. Parents can also start a precedent with their children and make a tradition of donating. They can demonstrate the importance of generosity and charitable giving from an early age.
Donations can change lives across the globe if choosing a charity abroad or worldwide foundation. But people can also make a difference right at home in a local community and see the impact of their contribution firsthand. In fact, support for local communities has grown significantly since the pandemic. By supporting local businesses, people can reinvest in their economies and keep money in their communities.
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