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Do Good|Nonprofits

What Is Charity? A Guide To Giving

By Caryl Ramsey|June 28, 2021
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Some words are so familiar that we use them without putting much thought into the actual meaning behind the word. For example, we hear and use the word ‘charity’ often but what is charity?

Charity is a humanitarian act of donating to an organization designated for a specific cause to help those in need. This help is given in the form of goods, money, or time with the goal of benefitting society. This aid is given without expecting anything in return and is the highest form of caring and unselfish love towards our fellow humans.

What Is A Charity? A Guide To Giving
Image by Capri23auto from Pixabay 

How Charities Are Formed

Ever wonder how charities are formed? Forming and operating a charity varies from state-to-state and from one country to another. One basic requirement is to register and file the non-profit organization within the state it’s formed and operates. 

To do this on the state level, you will need to set up Articles of Incorporation. The Articles of Incorporation include the following:

·        Name

·        Effective Date

·        Member Information

·        Corporation Type

·        Registered Agent

·        Principal Office Address

·        Mailing Address

·        Director Information

·        Indemnification Against Personal Liability

·        Organization’s Purpose

·        Prohibited Activities

·        Distributions Upon Dissolution

Check with the National Association of State Charity Officials for further information by state.

Once the Articles of Incorporation are approved by the state you must do the following:

·        Apply for a Federal Employer Identification Number from the IRS

·        Open a Bank Account for the Charity

·        Apply for 501(c)(3) Status With the IRS

·        Register as a Charity

What Is A Charity? A Guide To Giving
Image by bluebudgie from Pixabay 

What Is A Public Charity vs A Private Foundation?

Charitable organizations operate either as a public or as a private charity. The difference depends on the source of funding. Charities typically receive their money from donations and grants and both are classified as tax-exempt by the IRS.

Private foundations get their funding from a single financial source such as an individual, family, or corporation and these sources receive a tax deduction for their donations.

Private organizations, which are overseen by trustees or the donors themselves, typically make grants or give funds to public charities. Some examples of private foundations include the Coca-Cola Foundation, Inc., the Walton Family Foundation, and The Bill and Melinda Gates Foundation.

Public charities are governed by a board of directors and receive financial support from the public sector such as government, corporations, individuals, foundations, or trusts.

Examples of public charities are Matthew 25: Ministries and Community Food Bank of Eastern Oklahoma and are two of the best charities to donate to according to Charity Navigator. Most public charities conduct charitable activities and provide services.

The Different Types of Charity 

There are many different types of charity each representing a specific cause. The following is a list of the type or category charities typically fall into and their mission:

·        Arts, Culture, Humanities – to promote artistic and cultural development and preserve its heritage

 ·        Human and Civil Rights – to defend civil rights and promote reform

 ·        Religion – to support religion, religious activities, and worship

 ·        Community Development – to promote economic growth and stability through affordable housing and to enhance public and private institutions

 ·        Environment – to preserve and protect the environment through research and conservation

 ·        Education – to provide opportunities to make schools more effective and accessible to all students regardless of background

 ·        Health – to promote treatment & prevention services, patient & family support, and medical research

 ·        International – to promote peace, defend human rights, and provide relief and development services

 ·        Animals – to defend, protect, and provide services to domestic, wild animals, endangered species, and their habitats

 ·        Human Services – to provide services to people in need through social services, youth development, rescue missions, homeless services, food pantries, food banks, and food distributions

what is charity
Image by Nevena Barberic

Ways To Contribute To Charities – Donate or Volunteer 

You don’t have to have an abundance of money to contribute to a charity. You can give a little, or you can give a lot. Most people associate giving with a monetary contribution but there are other ways that are just as valuable. Some of these include the following:

1.   Volunteering your time at soup kitchens, homeless shelters, food pantries, animal rescues, etc.

 2.   Volunteering your services using special or professional skills like building homes for Habitat for Humanity.

 3.   Donate goods which might include clothing, shoes, furniture, or a vehicle.

 4.   Organize a drive to collect donations for an organization.

 5.   Provide a fundraiser to raise money for a charity.

 6.   Use services that support charities such as Spiral banking¹ services, where you can use the app to donate. Spiral will even match donations made within their mobile app, up to $150 per year³. What could be better than doubling your donation?

 7.   Check with your employer to see if they offer gift matching where they will match part or all of your charitable donations.

 8.   Donate your tax refund.

 9.    As a holiday or birthday gift idea, donate to a charity instead. Facebook will let friends donate to a cause chosen by the person with the birthday.

10.  Donate your credit card rewards by donating your cash back, points, or miles directly to the charity.

 11.  Get a charity-focused credit card that is specifically designed for giving to charities.

 12.  Donate your organs by registering with the National Donate Life    Registry.

 13.  Donate blood to organizations such as the American Red Cross.

The question that pops up most often with monetary contributions is how to decide how much to donate to charity. According to MarketWatch, the middle ground is around 4% of your adjusted gross income. Of course, how much you donate is entirely up to you.

What does charity mean to you? Some of these donations aren’t monetary like donating your organs to save the life of another person. For some, it’s the ultimate sacrifice.

When you give to a charity you don’t expect anything in return. However, there are tax advantages for both the organization and the donor due to the direct benefit to society which results in qualified charities being exempt from paying federal income taxes.

Cash donations and non-cash donations such as household items are tax-deductible expenses for the donor.

t Is the Importance of Charity
Image by Mary Pahlke from Pixabay 

What Is the Importance of Charity?

What is the importance of charity and do charities actually help? They absolutely do!

Charities benefit society and anything that benefits society is important. Charitable organizations raise awareness of issues such as human rights, public health, poverty, racial equality, sustainability, and offer hope for those in need.

Charities also help create a better future for humanity and generations to come. They teach future generations how important compassion, generosity, and coming together as a community are in creating a more peaceful world and, therefore, a more fulfilled life. Overall, it makes the world a better place for everyone.

How are charities funded? Charities are funded either by the public or the private sector through cash donations, non-cash donations, and volunteering.

The monetary contributions received by charitable organizations are not about making a profit but about making a difference to society.

Now that you have a clear picture of what is charity and how charity works, You can make a difference today by supporting a cause of your choice.

How can you make an impact with Spiral Giving™? 

Spiral is the pioneer of the Impact-as-a-Service™ platform that helps banks and financial institutions easily embed sustainability, social impact, ESG, and CSR into their businesses. Their mission is to empower 10,000+ U.S. financial institutions and millions of people to contribute to a better world.

Caryl Ramsey
I earned a B.A. in English Literature/Writing. I have experience as a Travel Writer and Editor for J. M. Marketing, a Huffington Post Travel Contributor, a Research Writer for Eastbay, a Travel and Business Featured Contributor for Yahoo!, and a Business Writer for Bright Hub. My past work experience includes small business ownership, education, and a license in Property & Casualty Insurance. I enjoy family, writing, reading, photography, travel, music, running, and sports.

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