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What are Charitable Contributions?

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  • Written By: Mary McMahon
  • Edited By: O. Wallace
  • Last Modified Date: 13 September 2016
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Charitable contributions are donations which are given to charitable causes. Donating funds to charity is often regarded as a positive character trait, especially among the wealthy, and in addition to being considered a decent thing to do, charitable contributions can also carry some tax advantages. While this wiseGEEK author hopes that tax advantages are not the primary reason for people to engage in charitable contributions, the tax benefits are certainly useful.

In order to be recognized as a charitable contribution for tax purposes, a donation must generally be made to an organization which is registered as a charity with the government. Registered charities provide proof to government auditors that they are operating as a charity, showing how their funds are utilized and what they do to contribute to the community. Charitable organizations which are not registered may have simply decided not to go through the process, or they may have failed the government audit; in either case, donations to unregistered charities are usually not considered to be charitable contributions in the eyes of the tax authorities.

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In many nations, charitable contributions are treated as a tax deduction, for people who fill out itemized tax returns. There is usually a space on the tax return for a list of contributions made to charity over the course of the year. For tax reasons, it is advisable to keep copies of all receipts for charitable contributions, along with the name and address of each charity, and the confirmation that the charity is registered with the government.

Charitable donations can take a number of forms. People can donate money directly, along with goods and services. Some people prefer to make single lump payments, while others may opt for an automatic deduction from a bank account or credit card. Charitable donations can also be posthumous, in the case of people who will their estates to charity. Some donors like to make their donations in honor of others, with charitable donations in the honor of friends and family being an option for birthday and holiday presents.

People who choose to make anonymous charitable donations may find themselves in a different situation when it comes to tax deductions. Some organizations do provide receipts for anonymous donors, and other anonymous donors may choose to make their names known to the organization, but request anonymity in publicity materials. In the case of something like an envelope of cash slipped under the door of a charity, it may be difficult to claim a tax deduction, and to prove that deduction in the event of an audit. For this reason, it is advisable to consult a tax accountant about the tax situation with anonymous donations.

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