It was estimated that last year people donated more than $211 billion to charity. While the sizeable estimate leaves no question that Americans are generous it less clear how careful we are about giving. Listed are four helpful hints to ensure your hard-earned money ends up in its intended place:
1. Be skeptical of cash requests.
This includes giving change on the street corner to individuals who say it’s for firefighters or veterans. Cash can be easily lost or stolen, and it does not provide accountability from the solicitor. Writing a check out to the full charity name – not the person collecting donations – is a better idea and will provide the donor with traceable documentation.
If you have any doubts, a little due diligence will help. If you’ve never heard of them, ask about their history or give them a call. Organizations that pop up overnight – after a natural disaster, for instance – can disappear as quickly.
2. Understand the mission.
Taking time to do a little research is better than asking questions on the spot. Indicate to the solicitor that you will mail the organization a check or donate online; they should be grateful for the support and should not pressure you to give immediately. The first thing to check out: mission or purpose statements. These sum up groups’ motivations and goals, and should be featured prominently on their websites or promotional materials. They might also be listed on a charity or business watchdog site. You can find a charity whose interests are aligned with yours. If you can’t find a mission statement, you should wonder how organized the group is, and how they make spending decisions.
3. Check their spending.
Rather than take charities at their word, you can look at how they actually spend. Either request an organization’s tax return (called Form 990) and locate it yourself. You can also visit a charity watchdog site that collects and analyzes them. Several suggested sites include Charity Navigator and Charity Watch. These sites also feature reviews from donors, which may give more insight.
4. Verify tax status
Ensure the charity is a qualified charity. Making sure you get a tax deduction for your donation is important, but as important is the charity is still recognized as a qualified charity by the IRS. Stacy said in our story losing tax-exempt status is a definite red flag and something you’d want explained. Sometimes good charities go bad – not necessarily in a scheming way, just through poor management. Either way, the government might take the group off its charity list. You can find the IRS list of organizations that lost 501(c) (3) charity online.