The Legalese of Donating to Charities
The Legalese of Donating to Charities
Donations are something that everyone knows about. However, it isn't very often that one stops to question the legal aspects of such a thing. The legal definition of a donation is "A gift of property". In some cases donations can be items such as clothing, food, or cars but just as often donations come in the form of money. This is especially true when dealing with donations on a political level. This is when the legal aspects of donation become very important.
When talking about donations on a political level, one of the first legal aspects one has to consider are ethics. It's important to establish the legal policies on accepting donations, as well as the use and recognition of these donations. When discussing donations and politics it is important to remember that there are rules and regulations to follow. For example, according to the FEC , there are restrictions on how much one can donate to a political party. The amount which one can donate differs based on the election, the individual, and the ranking of the candidate being donated to. There are also contributions that are prohibited from being accepted. Many individuals are able to donate to political campaigns, but at the same time there are three groups who are not allowed to contribute. These three groups are; Federal government contractors, minors, and foreign nationals. These groups are not allowed to have any influence in a campaign.
While individuals do contribute to political parties with their donations, more often than not, these political parties will work with corporations and lobbyists as well. It is a give and take relationship between the corporations and political parties. The corporations giving donations to the political parties, and in return during economic crisis, there is a bailout for the companies from the government. Now that the corporations are doing better they in turn, will donate once again to the political campaigns as they come around. Sometimes, a lobbyist from an organization is used by political parties to encourage either the defeat or passage of a legislation, depending on the parties viewpoint. Lobbyists are not supposed to contribute to the political parties, unless they are part of a political committee or national political party. This leads us to the rules for accepting donations and recording those donations (PDF) , as well as recording requirements of these donations. Regardless of the rules, the fact is that sometimes corporations still affect the government . In return, campaign cash helps the corporation make financial gains as well. No matter where one goes, there will always be a connection to corporations and campaign finance (PDF) .
No matter what is being donated or who is donating it, one thing is for sure, there will be taxes. Sometimes one's donations are tax exempt while other times the donation is tax deductible . It can be tricky trying to understand the difference between tax-exempt and tax-deductible. The basic difference is that tax-exempt means that one's taxable income is reduced. These exemptions are possible because of tax breaks that the government grants. Student loans are an example of a deduction. There are tax benefits that accompany donating to a charity. When one claims their donation they can receive a charitable contribution reduction. When considering this however, one must also understand how changes in deductions affect contributions themselves. By claiming one's contributions as tax-deductible, sometimes the actual donation is decreased as the government cuts the tax bill to accommodate, therefore reducing the donation itself. There are some helpful tips for those who wish to deduct charitable contributions. However, there are limits on charitable gifts and donations. A gift that is greater than the deduction limit that year will most likely require one to carry the remainder forward five years. This is just one of many ways that a deduction can be limited. In fact, the IRS has several factors that could limit the deductibility of a donation. These factors could include the type of donation made, the income of the donor, or the organization the donation was made to for example.
With so much to consider when donating to a charity there are a few key things to keep in mind. One must always be wary of charity fraud. There are a few key signs that a charity may not be legitimate. A few examples are; Charities that offer a prize, asking for cash donations, high pressure pitches, and overnight delivery service to collect donations being offered are all signs that the charity may not be one to work with. There are a few ways one can check up on these seemingly distrustful charities. A few organizations offer their services in order to inform the charitable as to where their donation would be received by a legitimate organization. FEMA also offers a site on which those looking to donate can find legitimate organizations easily and safely. Another thing to keep in mind is there are many ways to find tips on what to look for when trying to find a charity to donate to, and what to avoid when it seems like something might be wrong. These tips will help one to know exactly what to be mindful of when donating to charities.