By now, most experts agree we’re experiencing an economic downturn or “recession,” with people becoming more and more wary about spending, as the jobless rate and home foreclosures rise, along with the general fear-factor about what lies ahead. 

That makes it a tough time for charities that depend on donations to provide food and services to the needy.

But well-known charitable agencies, such as the Salvation Army, American Red Cross and others, are hoping to find continued support, because when the going gets tough, people need them - and contributions - even more. 

And charity-monitoring agencies, such as Charity Navigator and Philanthropy, want givers to know that during an economic downturn it’s more important than ever to make charitable donations.

Why? First, the downward trend won’t last forever, but charities that have to close their doors for lack of donations during hard times may not be able to re-open after the storm, so they need continuing support.

Additionally, charities help folks make it through the difficult times, benefitting society overall.

And, last but not least, people who donate to charities get back solid benefits in tax deductions. Most charitable donations are deductible up to 50% of adjusted gross income on individual income tax returns.

Other good news?
Charity Navigator, an independent charity evaluator, also thinks there will be some positive changes for donors as a result of the bad economy. The current number of charities registered in the U.S. is over 900,000 in 2008.

They predict that some poorly operated agencies will likely close and redundant agencies will merge, leaving more room for better-prepared and organized charities to expand services and draw donations with less competition.  

Tax benefits of giving
And don’t forget the tax benefits of giving:

• A donation to a qualified charity is deductible in the year in which it is paid as long as you itemize your deductions. There are caps to how much you can deduct each year, but (unfortunately) most people don’t contribute enough to be affected by those limitations.
• If you’re not certain if the charity to which you’re donating is a qualified charity, ask. You can even check on the charity by searching in IRS Publication 78, Cumulative List of Organizations.
• When donating noncash gifts, such as clothes or furniture, you generally can deduct the lower of your basis or the fair-market value of property. Make a list of the items you gave and always get a receipt.
• A donation worth $1,000 made by someone in the 25% tax bracket may be worth $250 in tax savings.

Charity Navigator provides a “Giving Calculator” on its Web site and the IRS provides detailed information on federal tax deductions for charitable giving. 

H&R Block, the world’s largest tax services provider, offers  DeductionPro® free with all its paid versions of Taxcut software (except Standard) to help you determine the fair market value of hundreds of commonly donated items and tracks money donations, mileage and medical donations all year long. 

Tips for giving
Charity Navigator has these suggestions for donating during an economic downturn:

• Give to an established charity
  Find a charity with a successful track record. Or, make sure a new organization is solid enough to spend your gift efficiently.
• Give to a qualified organization
  Make sure the agency has been recognized by the IRS as a qualified organization under Section 501(c)(3) of the Internal Revenue Code to ensure your contribution will be deductible for income tax purposes. 
• Designate your gift
  Many charities allow you to choose the agency’s program where your money will be used. If that’s your wish, be sure to tell the charity how you want your gift to be spent.
• Give directly
  Instead of giving through a for-profit fundraising company, which will take a percentage of your gift, give your donation directly to the charity, either by mail or online.
• Give online
  Online giving provides instant gratification to donors and allows charities immediate access to your much-needed gift.  
• Get a receipt
  Obtain contemporaneous written acknowledgement from the charity for any contribution of $250 or more and keep good records supporting your charitable deductions.

For contributions of any amount, retain records to support the contribution such as a cancelled check, a bank statement showing the name of the charity plus the date and amount of the donation, or a written communication from the charity that includes this information.