Thanks to the Internet, finding and researching charities that interest you has never been easier. Before making a donation, use these tips to ensure your gift accomplishes what you want it to.
To find the right charitable organization thats financially efficient and supports a cause you find important requires a little homework. A good starting point is the charitys own Web site, which should include details about programs and how gifts are spent, as well as financial information such as an annual report.
Here are some other tips to help you look a little closer.
Check legitimacy
There are a lot of charity scams out there! So, if youre interested in, but not familiar with a particular charity, or if youve been contacted by phone or letter asking for money for a cause, your first step is to see if theyre legitimate.
The Internal Revenue Service maintains a list of all organizations registered as charities. Also check with your states attorney general or charities bureau, which is responsible for policing charities within the state and can provide a wealth of information about them. Go to www.nasconet.org to find your states charity regulator.
Check efficiency
To make sure your money is spent wisely you need to research the charitys finances.
You can look this up at www.charitynavigator.org or by looking over the IRS form 990 that the charity files (available at www.guidestar.org or on the charitys site).
Generally, an efficient charity should keep administrative and fund-raising expenses to less than 25 percent of its budget. Most good charities are well below that number. If a charity you want to support spends more than 25 cents on the dollar for administration and fund-raising, you need to find out why.
Another good resource is the Better Business Bureau Wise Giving Alliance which offers free analysis of national charities on its Web site at www.give.org.
Note that many religious organizations are exempt from filing with the IRS, but reputable organizations will gladly provide you with their financial information anyway. To help you research Christian charities, see Ministry Watch (www.ministrywatch.com) or the Evangelical Council for Financial Accountability (www.ecfa.org), which provides information on more than 2,000 Christian charity groups.
Compare fairly
Many people like to compare charity efficiency ratings head-to-head. If you do this, be sure to compare charities that have similar missions.
For example a soup kitchen might spend 95 cents of every dollar on its programs because theres little to no administrative costs. Yet its rare to find a museum that spends more than 75 cents on the dollar because museums need guards, insurance and big buildings.
Ask questions
Contact the charity directly and ask lots of questions to be sure youre clear on what they do and how they do it. Some questions to start with should include: How will your gift be spent? How many people did they help last year? In what way?
Well-run organizations will welcome your questions. If they dont, go elsewhere.
Tax-deductible
Before giving a donation to any organization, make sure it is a 501(c)(3) charity. That means the group has filed paperwork with the Internal Revenue Service, registering it as a charity, not just as a not-for-profit organization. Generally speaking, only donations to 501(c)(3) charities are deductible.
Membership dues to not-for-profit associations, trade groups, professional societies and the like may be deductible as a business expense. Check with your tax advisor if you are in doubt.
Also, keep in mind that if you receive something in return for your donation, you may not be able to deduct the entire amount. The charity should furnish you with a receipt that specifies whether or not you received any services or goods in exchange for your donation.
Avoid the phone
When it comes to giving money, avoid donating over the phone.
Nine out of 10 times, the phone solicitor is a for-profit telemarketer who is working on behalf of the nonprofit for a percentage of the take, which can range from 50 cents to 90 cents on the dollar. Send your donation directly to the charity, and be sure to get a receipt of your donation for tax purposes. Also, be sure the charity respects your privacy and does not share your personal contact information with any other organizations.
---Jim Miller is a contributor to the NBC Today show and author of The Savvy Senior books.
