Want to know how to become an informed donor? Check out the top ten
tips below for making a wise donation.
| 1. Know your charity.
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| Charities have an obligation to provide detailed information to interested
donors. Never give to a charity you know nothing about. Request written
literature and a copy of the charity’s latest annual report. This should
include a list of the board of directors, a mission statement and the most
recent available audited financial statements with accompanying notes.
If a charity does not provide you with the information you request, you may want
to think twice about giving to it. Honest charities typically encourage your
interest and respond to your questions.
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2. Find out where your dollars go.
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Ask how much of your donation goes for general administration and fundraising
expenses and how much is left for the program services you want to support.
American Institute on Philanthropy’s Charity Rating Guide
recommends that in most cases 60% or more of your charitable donation should go
to program services. Less than 40% should be spent on general administration
and fundraising costs. Keep in mind that newer groups and those that are
working on less popular issues may find it necessary to spend a greater
percentage on fundraising and administrative costs than well-established,
popular groups.
Attempt to seek more information about charities that identify as “public
education” large portions of their direct mail and telemarketing expenses.
This may be done in some cases to disguise high fundraising costs.
It is difficult to find out the real percentage of donor dollars spent on
program services due to the inconsistent quality of charitable self-reporting.
But you can ask the charity’s representative for specific information,
such as how many individuals were served annually or what were the major
program accomplishments during the past year.
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| 3. Do not respond to pressure.
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Do not let yourself be pressured into contributing on the spot. If you are not
familiar with a charity, request additional information in writing. Inspect it
carefully and write a check if you decide to donate. You have a right to say
no. No legitimate organization will pressure you to give immediately.
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4. Keep records of your donations.
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Do not give cash. Also, do not give your credit card number to a telephone
solicitor you do not know. Give your gift by check or money order so you will
have a record for tax purposes. For online donations, make sure that the web
site on which you will be providing your credit card information ensures you
that it utilizes a secure transaction process. Also make sure that you will get
a copy of your receipt online or via an email. For all CommunityRoom.net
transactions, you will receive a printable version of your receipt online.
CommunityRoom.net Members can also retrieve copies of receipts for previous
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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| 5. Remember: “tax exempt”
does not always mean “tax deductible.”
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Not all charities soliciting for “good causes” are eligible to
receive tax-deductible contributions. “Tax exempt” means the
organization does not have to pay taxes. “Tax deductible” means the
donor can deduct contributions to the charity on his or her federal income tax
return. Request the charity’s tax exempt letter. If the charity does not
have a tax exempt letter indicating its status with the IRS, you cannot
legitimately claim your contribution as a tax deduction.
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| 6. Do not be misled by a charity’s familiar name.
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Some questionable charities use an impressive name which closely resembles the
name of a respected, legitimate organization. Ask for information in writing.
Check out the charity with
American Institute on Philanthropy or other watchdogs or check with
your state charity registration office before making a contribution.
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| 7. Do not be enticed by emotional appeals.
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Beware the pathetic “sob story.” The hard-luck appeal is a favorite
of some organizations. Question phone solicitors or direct mail appeals which
tell you nothing of the charity or offer vague explanations for spending your
charitable dollars.
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| 8. Ask if the charity is registered by federal, state and/or
local authorities.
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Nearly all non-church charities with more than $25,000 per year in income must
file annually with the IRS. Currently 36 states require that charities register
annually. Bear in mind that registration in and of itself is not a stamp of
government approval or endorsement of the charity.
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| 9. Beware of charities offering gifts.
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Direct mail solicitations are often accompanied by greeting cards, address
stickers, calendars, key rings or other “gifts.” Charities do this
because it can increase donations. But do not feel that you have to make a
contribution to keep these “gifts.” It is against the law for a
charity to demand payment for any unordered merchandise. Beware that these
enclosed items can mean higher fundraising costs for the organization.
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10. Consider giving generously.
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Once you are satisfied that the charity is worthwhile, give generously if you
can. There are many good charities that need your help to operate valuable
programs and provide needed services. When you give wisely, you will be giving
more effectively.
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