NerdWallet: When to donate rewards to charity and when to give cash | Our Columnists


Should you’re trying to give to charity this vacation season however don’t need to dip into your checking account, donating unused bank card rewards, lodge factors and airline miles is usually a useful various. In some instances the charity can use the rewards for journey wants, and in different instances, the issuer can convert them to money for the charity.

And nonprofits’ wants are skyrocketing amid the COVID-19 pandemic. A July 2020 evaluation by Candid, a gaggle that gives details about nonprofits, discovered that greater than one-third of them could also be compelled to shutter on account of the dual crises of the pandemic and recession.

Listed here are occasions it will possibly make sense to donate out of your bank card rewards stash and occasions when it’s not the perfect thought.

When donating factors work nicely

While you (and the charity) will get good worth for the factors: Generally level values are diminished if you happen to donate them. Different occasions, it’s a good and even superior worth.

Citi lets eligible cardholders donate ThankYou factors to a handful of charities at a worth of 1 cent every. That’s the baseline worth you’d need for journey redemption, and it’s a greater worth than redeeming for money again.

Those that maintain eligible Chase bank cards can redeem their factors for assertion credit to cowl donations to a few dozen charities, once more at a charge that’s increased than the penny-per-point worth for money again.

There are third-party choices, too. Miles4Migrants, a charity that makes use of donated miles to assist individuals affected by disasters, works to get full worth for presented rewards. “Now we have a group of skilled award bookers seek for flights and provides that data to the donator, who books the flight immediately for the individual in want,” advertising and marketing supervisor Cat Cooke mentioned.

When your provide outpaces your demand: Factors and miles don’t earn curiosity and may be devalued. Should you’re sitting on extra factors than you’ll use within the subsequent two years, donating them could make sense.

Derrick Dye, an lawyer and blogger at Journey-on-Factors, earns tens of millions of miles a yr and strives to donate 10% of them, even when it’s not for outsize worth.

“My spouse and I really feel strongly about supporting our nation’s veterans, and donating our Southwest Airways factors to the Honor Flight Community is a simple method for us to provide again,” Dye mentioned.

When donating factors isn’t actual

When your factors lose vital worth: Many loyalty applications don’t disclose what number of {dollars} a charity will obtain on your factors or miles donation. However usually it gained’t be the identical worth you could possibly count on if you happen to used them for journey.

Marriott, as an illustration, presents a strong listing of charities to which you’ll be able to donate Bonvoy factors — from as few as 2,500 factors for a $10 donation, as much as 125,000 factors for a $500 donation. That’s a worth of 0.4 cent per level, however you possibly can greater than double that if you happen to use them for journey.

Should you can donate money rewards as a substitute: Some playing cards could offer you an choice to earn rewards as factors or money again. And whereas factors can generally supply a good or wonderful worth when donated, money again stays probably the most versatile reward of all.

You can provide that cash to any variety of charities, not simply ones that accomplice with the cardboard issuer. Plus, you would possibly reap tax advantages this manner.

As a result of the IRS typically views bank card rewards as rebates and never revenue, donations of factors and miles aren’t eligible write-offs — however financial donations may very well be. Should you redeem rewards for money again after which donate that on to a charity, you’re giving cash, not factors.

You probably have various ‘discovered funds’: One other solution to keep away from tapping into your checking account or your rewards stash is to donate “money equivalents.” One instance: unused present card balances that could be floating round your desk.

Charity Alternative, a nonprofit that lets customers ship present playing cards to greater than 1,000 totally different charities, additionally accepts unused balances on present retail and restaurant present playing cards.

“There’s been an avalanche of curiosity in individuals donating present playing cards, and shopping for charitable present playing cards for his or her associates and shoppers,” Charity Alternative co-founder Daniel Goodman mentioned.

You’ll obtain a tax receipt for the total worth of the present card you donate.

This text was written by NerdWallet and was initially printed by The Related Press.


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