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Maximizing Charitable Donations this Holiday Season

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I often tell new award travel enthusiasts that one of the keys to accumulating points and miles is learning how to earn rewards on every purchase, and charitable donations are no exception. While your first consideration should be to the charity, today TPG Contributor Nick Ewen explains ways you can also get while you give.

The focus of this site is to help you maximize your points and miles in terms of both earning and redemption. However, there are many ways you can use those points & miles to help others. In fact, there are some ways to both earn points and donate to a worthy cause at the same time. In the spirit of the holidays, today I’ll walk you through some strategies to make the most of your charitable donations in order to help you feel good about giving more.

United Way allows you to make donations using just about any points-earning credit card.
United Way allows you to make donations using just about any points-earning credit card.

DONATE USING A CREDIT CARD

The first way to maximize charitable giving is by making donations on a credit card. Just about all of the large charities (and many smaller ones) allow you to make donations using a credit card with no additional fee. I did this back in August when I was issued the ALS Ice Bucket Challenge:

Screen Shot 2014-11-28 at 9.22.03 AM
I used a credit card for my donation to the ALS Association earlier this year.

I chose to put this transaction on my Barclaycard Arrival Plus , which effectively earns me a return of 2.2% for my donation. You could also use the FlexPerks Travel Rewards Visa Signature, which always offers triple points on charitable donations.

Donating using a credit card can also be useful beyond the standard earning rates:

  1. Earning a sign-up bonus: Donations count like other charges toward the spending threshold to earn a sign-up bonus, which could offer an incentive to give more. For example, one of the top credit card offers out there is the Citi Hilton Reserve, which gives you two free weekend night certificates after spending $2,500 in the first three months of cardmembership. If you donated the full $2,500 to charity, you would earn the two certificates, which can easily be worth $500+ each, plus 7,500 Hilton HHonors points (worth $37.50 according to TPG’s November valuations).
  2. Earning a spend threshold bonus: Many cards also offer you various bonuses for spending a certain amount in a calendar (or cardmembership) year. For example, the British Airways Visa offers a Travel Together Ticket after you spend $30,000 in a calendar year, while many Delta American Express cards will award you bonus MQMs after hitting different spending thresholds. Again, charitable donations count toward these thresholds just like other charges.
  3. Earning a transaction bonus: This doesn’t apply to many cards, but both the Amex Everyday and Amex Everyday Preferred cards offer bonus earning potential based on the number of transactions you have in a billing period. 20 or more transactions on the Everyday card earns you a 20% bonus, while 30 or more transactions on the Everyday Preferred card earns you a 50% bonus. If you’re a little short of those thresholds, making several donations to boost your number of transactions could be a valuable proposition when it comes to earning Membership Rewards points.

If you do donate using a credit card, be sure to check with your employer to see if they offer a matching gift program. My company matches up to $1,000 in charitable gifts per year, and I utilized this program when I donated to the ALS Association in August.

Finally, most donations should be tax deductible, so check with a tax professional to see if your charitable contributions can help you next April 15th.

US Airways allows you to donate Dividend Miles to various organizations through their "Miles for Hope" site.
US Airways allows you to donate Dividend Miles to various organizations through their “Miles for Hope” site.

DONATING POINTS AND MILES

Another great option, especially for the typical TPG reader, is to donate points or miles to charity. Just about every loyalty program partners with various charitable causes, and you can donate directly to established national or international charities (like the American Red Cross, Make-A-Wish Foundation, and Habitat For Humanity) or pool your miles into a pot that is then distributed to worthy charities. Here are links to the donation pages for major airlines:

And here are the same links for major hotel programs:

Finally, here are the sites for other credit cards not affiliated with a specific loyalty program:

Unlike credit card donations, contributing points and/or miles to charity is not tax deductible, since the IRS considers these points and miles gifts from the airlines (rather than property). Again, consult a tax professional if you plan to deduct large donations.

Toys for Tots is an easy way for you to contribute to needy children this holiday season.
Toys for Tots is an easy way to contribute to needy children this holiday season.

DONATE FOOD OR OTHER ITEMS

Instead of simply giving money or donating points and miles, consider donating actual goods. This allows you to take advantage of bonus spending categories at places like supermarkets, toy stores, or online retailers. Here are some suggestions:

Non-perishable food: Around the holidays, many local food banks and charitable organizations run food drives to feed the hungry (though you’re certainly not limited to donating in November and December). This is a great chance to help in your local community as well as to earn points or miles on your purchases. Many cards offer bonus points for purchases at grocery stores and supermarkets.

Toys: One of the most popular charity drives around the holidays is Toys for Tots. You can donate money using a credit card or find a local spot to contribute a toy directly. My gym does a Toys for Tots drive every year, and chances are strong that you have a local organization with a similar campaign.

You can increase these earnings even more by going through an online shopping portal. At the time of writing, Ebates is offering 2% cash back on toy purchases at Amazon, while Mr. Rebates gives you 6% back on sports & outdoor purchases. You could also make these purchases at Toys R Us through the American Airlines shopping portal, which is currently offering 4 AAdvantage miles per dollar spent.

Charity Choice allows you to donate unused (or brand new!) gift cards to charity.
Charity Choice allows you to donate unused (or brand new!) gift cards to charity.

Gift Cards: Instead of donating money, you could also consider donating gift cards. This is a great way to get rid of small balances left on cards you don’t plan on using, but you can also get points and miles by purchasing new cards and donating them directly. Since cards like the Chase Ink Plus and Amex SimplyCash Card offer 5x points at office supply stores, you can get a decent return when you purchase gift cards at Staples or Office Depot and then donate them using sites like Charity Choice or Plywood, or through a local charity.

Like with toys, use an online shopping portal if you’re purchasing the gift cards through Staples’ eGift card site. For example, Ebates is currently offering 2% cash back at Staples, and Domino’s Pizza gift cards of $50 or more are currently on sale at Staples (using code 75217). If you purchased a $50 gift card, you would pay $40, earn 200 Ultimate Rewards points (worth $4.20), get $0.80 cents back, and donate the full $50 to charity. Charity Choice will even give you a tax receipt for the full balance of the donation (though again, check with a licensed tax professional to make sure you can deduct the expense).

Items for resale: A fourth option is to donate items that tend to retain a high resale value. TPG did something along these lines last fall, when he purchased designer handbags and donated them to Housing Works for resale. He did it in conjunction with a promotion for eBags.com, which was offering 35 AAdvantage miles per dollar spent. You could then do what TPG did and donate the miles you earn, or come away with a nice haul for your charity.

However, before doing this, you definitely want to make sure that the charity will accept these items, and see what type of reselling locations they have. Donating a brand new iPad to a local thrift store that mainly sells clothes and used furniture probably won’t do nearly as much good as just donating cash!

Other items: Finally, if you have a favorite local charity, call to see if they need any specific items, like clothes, office supplies, or other equipment. You can then try to find those items at merchants either online (again, through an online shopping portal) or in person, and use a rewards credit card to earn points and miles in the process.

Walgreens is one retailer that allows you to donate to a charity right at the register.
Walgreens is one of many retailers that allows you to donate to charity at the register.

DONATE TO A CAUSE AT THE REGISTER

Another common opportunity to donate to charity comes when you’re checking out at a fast-casual restaurant, grocery store, or pharmacy. I just encountered this last week at Walgreens, which is partnered with the American Diabetes Association to accept donations during the month of November (American Diabetes Month). I just added $5 onto my bill and earned extra points in the process.

Bank of America issues two different charity credit cards, but neither one has spectacular benefits (nor large contributions to the designated charity).
Bank of America issues two different charity credit cards, but neither one has spectacular benefits (nor large contributions to the designated charity).

OPEN A CHARITY CREDIT CARD

This is a great opportunity for those who are new to the points and miles game. Some issuers offer credit cards that are devoted to a specific charity. For example, Bank of America has two charity-affiliated products: the Susan G. Komen Cash Rewards MasterCard and the World Wildlife Fund Cash Rewards Visa. Both offer a sign-up bonus of $100 cash back after spending $500 in the first 90 days of cardmembership. You then earn 3% back on gas station purchases and 2% back on grocery store purchases on up to $1,500 in combined purchases every quarter (1% back on all additional purchases). Finally, Bank of America checking or savings account holders earn a 10% bonus when cash is redeemed into their accounts.

The charities benefit by getting a donation from Bank of America for every new account approval ($3 for Susan G. Komen, $5 for the WWF), every transaction (0.2% for Susan G. Komen, 0.25% for WWF), and every yearly card renewal ($1 for Susan G. Koem, $5 for the WWF). These numbers are small, but every little bit helps. Since the cards have no annual fee and still offer some bonus categories for spending, they make for nice entry-level cards if you’re new to the game.

What are your strategies for making the most of your charitable donations?

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