It’s better to give than receive. Seriously, it’s a scientifically validated fact. If you want to buy happiness, spend on others. In a year when many are struggling — physically, emotionally, and financially — due to the COVID-19 pandemic, doctors can do the most good and feel good in the process by giving to charities. Still need convincing? Research shows that altruism has validated psychological benefits. And if that isn’t enough of a sell, how about saving on taxes in the process? Here’s what doctors need to know about charitable giving, plus some insights as to selecting your charity of choice. The feel-good perks A Science study provided evidence of a positive impact on happiness in those who spent on others. Among the more than 600 people who participated, those who received a sudden windfall and spent it on others were happier than those who spent on themselves. This was true even after controlling for happiness levels prior to the economic windfall. Participants received an envelope containing $5 or $20. One group was told to spend the money by day’s end on themselves. The other group was told to spend the money on somebody else. At day’s end, researchers asked participants to report happiness levels. Those who spent the money on others reported statistically significant higher levels of happiness than those who spent on themselves. In a Harvard Business School interview, researcher Michael I. Norton says the benefit lies in connecting with others. “One of the reasons is that it creates social connections. If you have a nice car and a big house on an island by yourself, you’re not going to be happy because we need people to be happy,” Norton said. “But by giving to another person, you’re…creating a connection and a conversation with that person, and those things are really good for happiness.” In August of this year, the same researchers scaled up their study — this time dividing it into three experiments — querying about 4,000 people total. In Experiment 1, researchers asked participants to spend a windfall on themselves or others in need. These participants, as predicted, reported greater happiness when they spent on others. Experiment 2, however, muddied the waters a bit. These participants were asked to recall a time when they spent money on themselves, or others, and report current happiness levels. In this experiment, those who spent on others did not report higher happiness levels. Researchers said this was likely due to “low task engagement.” In Experiment 3, the researchers repeated Experiment 2, but made some small changes to increase task engagement. Participants who recalled a memory of spending on others reported a slightly higher level of happiness. Putting this into practice, the research seems to suggest that yes, charitable giving may make you happier, but only in the immediate term, and only if it’s a charity you are engaged with and care deeply about. The financial perks If feeling good isn’t enough of a reason to give to charity this holiday season, perhaps handing over less money to the government is more incentivizing. When you donate money, certain types of financial holdings, or property to qualifying organizations, the IRS will allow you to deduct some or all of the value of these donations from your taxable income. This may lower what you owe in federal income taxes. But don’t get too excited. The IRS has strict charitable giving regulations, and we strongly suggest you discuss any gifts with your accountant before making them and before the tax filing deadline. What follows is a general overview of what you can expect. In the vivid style typical of the IRS, the whimsically titled Topic No. 506 Charitable Contributions page sheds some light on the tax advantages of charitable giving. First, the form. The IRS requires you to itemize all qualifying charitable contributions on Schedule A (Form 1040 or 1040-SR), see lines 11-14. This begs the question, what makes for a qualifying charitable contribution? Let’s begin with what isn’t. The IRS says contributions to individuals are “never deductible.” So while it may seem charitable to bail out our do-nothing brother’s failed business venture, it isn’t in the eyes of the IRS. To find qualifying organizations, you can check out these resources: A, B, and C. The other major thing you’ll want to do is document all charitable contributions given in cash, check, or monetary gift. Proper documentation includes bank records or written communication from the receiving organization that includes the organization’s name, amount given, and date of contribution. If donating property, such as a car, the IRS allows you to deduct the “fair market value” of the property. The IRS has steps for determining fair-market value. Follow them and document your findings. Finally, if you’re making a cash or property donation valued at $250 or more, you must maintain a record of the amount and description of your contribution. Additionally, the record must include anything you might have been given in exchange for your donation. Let’s say, for example, you donated $1,000 to your local NPR station. In exchange, they gave you a dozen swank coffee mugs with an estimated fair-market value of $60. All of that should be in your records. Whom to support Now, you may be sold on giving to charity this holiday season, doctor, but the remaining question is, whom to support? To support happiness, the charity should be one to which you have a high level of engagement, the research suggests. This likely will be subjective. Begin creating a list of possibilities by asking yourself what causes are important to you. From there, you’ll want to zero in on organizations that support your chosen causes. But keep in mind that charitable organizations, like hospitals and medical practices, are subject to bureaucratic bloat and high overhead. Much of your donation may go toward executive salaries or keeping the lights on before it ends up in the pockets of those whom you’re trying to help. GuideStar is a great place to vet the charities you’re considering. The website archives IRS filings for nearly 2 million non-profits and will provide you with background on your chosen charities’ income, executive salaries, mission, and spending. This will help you determine how much money is actually making it to the people you want to help. As an added bonus, you can snoop on your employer and check if they’re a 501 (c)(3), which many hospitals and healthcare organizations are. Another investigative angle you might take in identifying your chosen charity/ies is Effective Altruism, which is a group that uses research and data to answer the question, if you’re looking to do the most good, what is the best charity to support? Effective Altruism has even created funds that benefit specific initiatives, one of which is the Global Health and Development Fund. This Fund is making inroads in the fight against malaria, after determining through careful analysis that insecticide-treated mosquito nets are one of the most effective ways to combat the disease. Final thoughts All lives and many incomes have been affected by the pandemic. If COVID-19 has shown us nothing else, it’s that we’re all vulnerable to economic uncertainty. If you have the means, perhaps this is the year to begin giving. Not only will it make you feel good, you’ll be doing good (and perhaps saving some money in the process). TL;DR Looking to buy happiness this holiday season? Give to charity and it will make you happy, research suggests. As an added benefit, qualifying gifts to qualifying charitable organizations may be deductible from your income and save you some tax dollars. But don’t just pick any charity. For maximum happiness, pick one you care deeply about. And do some research on GuideStar first to determine how much of your donation will make it to the people you’re trying to help. Source
