When the calendar turns to November, 'tis the season for appeals for charitable gifts. Between November 1 and the end of the year, the typical American home will receive dozens of mail, phone, and even door-to-door solicitations for gifts. The Federal Trade Commission (FTC) notes that more than 500,000 federally recognized charities exist. And each year individuals contribute more than 80% of all money raised by charitable causes. Wise donors want to make sure that their charitable gift dollars are used wisely and responsibly. They also want to avoid those scam artists and phony charities that prey on people's generosity.
The resources in this Remar's Review can help you check out a nonprofit organization (NPO) or charitable cause before you give as well as educate yourself more fully as a donor. Your gift dollar is too valuable--and too powerful for good--to waste.
Tips on Giving Wisely as an Informed Donor
- Insist on written information. Phone calls and emails aren't enough. Written materials should include the organization's name, address, phone number and mission; how your gift will be used; and proof that gifts to the organization are tax-deductible (or a clear statement that they are not).
- Check the charitable organization's record of accountability. Use one or more of the monitoring sites in the next section to review the organization's record. Don't fall for a touching story not backed-up by facts and a track record.
- Give by check, not cash. Make the check out to the organization, never an individual. Say no to any solicitation which offers to pick up the check immediately in person-this is a classic scam technique.
- Keep a record of the gift. Such records include a receipt from the recipient, cancelled check, and bank or credit card statement. Use these to support the deduction on your tax return.
- Stay alert for names that are similar to well-known legitimate organizations. Some phony charities will pick such similar names to duck under a donor's radar. Check these groups out very carefully.
- Don't fall into the following subtle traps:
- Calling the organization "tax exempt" to imply that your gift will be "tax deductible." An organization to which gifts are tax deductible typically will have a 501(c)(3) designation from the I.R.S.
- Formatting appeals as a bill or invoice. In my opinion, this is a deceptive practice even if the material states that it is not a bill somewhere on it.
- Mentioning (in a call or letter) a pledge that you did not previously make. Hang up on the call or tear up the letter.
- Demanding payment for merchandise you didn't order. This practice is illegal-if they actually sent something you don't have to pay for or return the merchandise.
For more information about these and other tips, see these resources:
Tips on Charitable Giving from the Better Business Bureau Wise Giving Alliance website, Give.org.
Charitable Donation$: Give or Take from the FTC
Tips for Giving Wisely from the American Institute of Philanthropy
Finding Information on Charitable Organizations
The following organizations and websites provide a variety of data to help you research and assess charitable organizations.
BBB Wise Giving Alliance, which was formed by a 2001 merger of BBB Philanthropic Service and the National Charities Information Bureau, offers reports on individual charities, a discussion of standards, a way to request information or file a complaint, and many other resources.
The American Institute of Philanthropy describes itself as a charity watchdog and information service. They provide reports on individual charities and general information.
GuideStar is a national database of nonprofit organizations that is produced by Philanthropic Research, Inc., itself a nonprofit organization. It provides information on hundreds of organizations.
Evangelical Council for Financial Accountability has established "Standards of Responsible Stewardship" for Christian ministries and philanthropic organizations which member organizations voluntarily agree to uphold. Use their website to identify and learn more about member organizations.
Just Tzedakeh provides resources for donors to Jewish charities.
Resources for Becoming a More Informed Donor
All five organizations in the previous section offer a number of resources for donor education. I recommend starting with the resources at Give.org. In addition to exploring the general resources available on these websites, check out the following resources.
Nonprofit Information Center provided by Independent Sector, a coalition of nonprofits, foundations and corporations, offers links to a number of resources on giving, volunteering and accountability.
Prepare Your Giving Plan from GuideStar helps you and your family think about and work out a giving plan that fits with your family values and goals. The article also links to other helpful resources.
Making Charitable Giving Part of Your Financial Plan: A Five-Step Guide is part of a website called "Sharing the Wealth" produced by Minnesota Public Radio. Though put up in 2000 when the site's subtitle "Charitable Giving in Prosperous Times" was more accurate, the site is a treasure trove of resources and links for any times. (Do be aware, however, that not all links are still working.)
How to Read the Form 990 and Find Out What It Means, written by Peter Swords for the Nonprofit Coordinating Committee of New York, explains how to read and interpret the Form 990 that nonprofit organizations are required to file each year with the I.R.S. These forms provide donors a primary means of checking on accountability.
Tips on Contributing Used Cars to Charity and
Tips on Police and Firefighter Organizations give information on evaluating and participating in these two popular types of appeals.
