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Article from the Sonoma Index-Tribune by M. Wilson:
Charity begins with homework Choosing the right charity is like picking a good stock. You want to make sure you get a great return on your philanthropic investment.
This time of year every charitable organization wants your money. How do you decide which ones get it?
Thanks in part to the Internet and to federal disclosure laws, consumers have more help than ever when it comes to making sure their money goes to a worthy, responsible organization and not to self-indulgent scam artists.
"Don't stop giving. Just give wisely," Wilson says.
Consumer advocates offer the following tips to help you effectively checkout the charities you're considering donating to.
- Make use of watchdog organizations that investigate and evaluate charities.
- Call or visit the charitable organization headquarters or a local chapter to find out more about it.
"By making direct contact with the organization, you can ask them for information about their overhead, fundraising projects, how long they've been in existence and how many people they serve," says Sandra Michioku, spokeswoman for the California Attorney General's Office.
- Be careful of "sound-alike" organizations.
For almost any cause, there are dozens of charities raising money, and some of them have similar-sounding names. Sometimes, the similar names are a deliberate attempt to confuse and deceive donors.
- Resist heavy pressure tactics. Be wary of charities urging on-the-spot donations.
"A charity that wants your money today will want it next week," says Wilson.
- Do not give your credit-card number, bank-account number or any personal financial information to any solicitor.
- Never give cash. Instead, make a check or money order out to the name of the charity, never to the individual collecting money.
- Ask solicitors to provide you with written information on the charity's programs and finances before you donate. Be wary of organizations that are reluctant to give information about their purpose and finances.
- Be skeptical of emotional appeals from charities whose literature or solicitors are vague about what the organization intends to do with the money you donate.
"There are some people (who claim to be) collecting for charities, but they're just scamsters. They do this all the time following any disaster and around the holidays," says Wilson. "The population is very vulnerable to emotional appeals this time of year."
- Although no rule or law dictates how much a nonprofit group can spend on fundraising and overhead, consumer advocates say it should be no more than one-third. Fifteen percent is even better.
- You're under no obligation to pay for or return unordered merchandise - stamps, greeting cards, pens, etc. - sent to you with an appeal letter. It's against the law for a charity to demand payment for any unordered merchandise.
- When you're asked to buy candy, magazines, cards or tickets to a dinner to benefit a charity, be sure to ask what the charity's share will be. You can't deduct the full amount paid, since the Internal Revenue Service considers only the portion above the fair-market value of the item to be a charitable contribution.
- If donating a vehicle to a charity, find out how the charity financially benefits from the resale of the car. If a third-party broker is involved, the charity may receive only a small percentage of the resale price.
- If you want a tax deduction for your donation, make sure the charity is listed under tax-exempt section 501(C) (3) of the Internal Revenue Code. The appeal will usually include reference to the tax-exempt status.
- Keep records of your donations. The IRS requires that you obtain a receipt from the charity (a canceled check will not suffice) for all tax-deductible contributions of $250 or more.
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