A common piece of personal finance advice is to “take free money. Even if you can’t do anything else, contribute to your 401k enough to get a company match.”
Many employers will match up to a certain percentage of your salary (usually 3-5%) as an additional contribution to your 401k. For example, let’s say you are earning $50,000/year and the match is 5%. When you contribute (tax-deductible) to your 401k of $2,500, your company will also put in $2,500.
If you don’t contribute, you are missing out on free money.
Surprisingly, the same holds true for donations to charity.
A less common piece of financial advice, but more important than ever during years like 2020, is this: find out if your employer will match your charitable donations so you can earn your favorite nonprofit free money.
Many companies will match (or even double or triple) the money that you give away.
For instance, say you donate $50 to the Human Rights Campaign. Some employers will also donate $50 (or sometimes $100 or $150) to the Human Rights Campaign. This means that in the end, the Human Rights Campaign may receive up to $200. That’s four times the amount of your original gift.
What You Need to Know About Workplace Giving
Do you want to donate to your favorite charity and have your workplace match your contribution? If so, there are some important things you must be aware of first.
Here are nine things to know about workplace giving:
1. If You Don’t Know If Your Employer Offers a Matching Program, Ask
Reach out to your human resources department or your company’s foundation if you aren’t sure if your employer matches donations. The question you have to ask is, “Do we have a donation matching or workplace giving program? If so, how do I participate?”
2. Typically, You Need to Submit Proof of Your Donation Through a Special Portal
Many employers utilize a service to help them administrate their workplace giving program. The portals are relatively easy to use, but can take a bit of time to set up if you haven’t participated before. Make sure you save your giving receipts (or reach out to the nonprofit to ask for a new one) so that you can ensure your donation is matched.
3. The Nonprofit Needs to Be a 501(c)(3)
While there are many amazing organizations and causes to give to, companies with workplace giving programs tend to be a bit particular about what types of organizations they will support. For example, typically there are additional guidelines/restrictions to ensure the company doesn’t give to any religious or political institutions or causes.
4. There is Usually a Limit to the Amount an Employer Will Match
Maybe you received a huge inheritance this year or have been able to be extra generous with your giving. Unfortunately, companies don’t (usually) offer unlimited matches. Find out what your company limit is, then give as generously as you can.
5. Some Donation Limits Are By Category
Some employers prioritize giving to particular causes. One way they may do this is by having different giving limits for different categories of giving. For example, they may limit uncategorized donations to $1,000, but also allow you to give an additional $1,500 to causes that support energy conservation or the arts. So, the actual limit is $2,500 based on how the company prioritizes their giving. (This means that your giving priorities may not line up.)
6. Your Employer May Have Special Incentives for Certain Categories
Similar to imposing limits by category, some companies also will offer different matching amounts. This means that for certain giving, your company may offer an even match. However, if you give to the arts or energy conservation and those are categories your company prioritizes, they may triple your donation. For 2020 in particular, many organizations have committed additional dollars to racial justice and companies have offered higher matching dollars for organizations that support racial equity.
7. The Deadline is Typically the End of Your Company’s Fiscal Year
Even if you give throughout the year (perhaps through automatic donations), most companies just require you get all of your requests for matching in before the end of the company’s fiscal year or the calendar year. Make sure you know your company’s deadline.
8. Gather Your Receipts Now so You Aren’t Reaching Out During the Last Week of the Year
One trap I have fallen into is the procrastination trap. I’ve waited until the last week of the year to gather all of my receipts and submit them through our workplace giving portal. Unfortunately, some organizations don’t send out receipts until after the first of the year, so I find myself emailing the development officers at the various charities I support to ask them for receipts during the week between Christmas and New Year’s.
Of course, nonprofits want these extra dollars, so I’ve almost always gotten the proof of donations that I needed. However, sometimes people are on vacation, and I otherwise feel bad about the end of the year scramble. I have learned from my mistakes, and I hope you do too. Start assembling your workplace giving documents now so everyone can enjoy their holidays.
9. Workplaces May Donate Dollars for Volunteer Hours or Board Work
Most workplace giving programs are targeted towards matching cash donations (“cash” meaning not stock or stuff — credit cards and checks are fine). Fortunately, some workplace giving programs also donate for volunteer hours or board work.
In the workplace giving portal, you enter the number of hours you volunteer with an organization. If you’ve volunteered so many hours (e.g. 25 hours minimum) or you’ve served on the Nonprofit’s Board, your company will donate some fixed amount (maybe $500-$1,000) regardless of whether you donated cash or just your time. This year has been tough, so if you haven’t been able to donate money, this is a great way to support organizations you care about in two ways — with your time and your employer’s dollars.
The Bottom Line
Workplace giving programs are free money for charities. Now, more than ever, these organizations need our support. Just like you wouldn’t pass up free money in your 401(k), don’t pass up free money for the nonprofits and causes you care most about.
Do you have a workplace giving program? Do you participate?
