Giving Charitable Gifts As an Informed Donor
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November 2003
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 700,000 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 StraightTalk Report 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 about the organization and how your gift will be used. 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 second section below 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 that 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's being tax exempt doesn't automatically mean that gifts to it are 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 practice is deceptive even if the material states somewhere that it is not a bill.
- 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 did not order, you don't have to pay for or return the merchandise.
For more information about these and other tips, see these resources:
A Word on E-Giving
"Quick" and "easy" are the promises of many websites that are springing up as a way for donors to contribute to favorites charities with just a few clicks. There are many different kinds of sites, however, and the reliability of the field as a whole is largely untested. Among the sites are useful services, unreliable sites, and scam artists. How can you tell the difference? Do your homework. Find out who's behind the site. Is it a for-profit site? Does it charge a fee for its services? How much of your donation goes to the charity? Is the charity you wish to give for comfortable receiving gifts through the site? What's the status of tax deductibility?
At present the smartest way to give online is probably to give directly through your charity's own website if possible. If not, check out the e-giving service carefully. Using the following tips can help.
e-Giving Tips
These tips from the Minnesota Toolkit for Giving apply all over the country.
ePhilanthropy Foundation's Tips for Online Giving
These tips come from the ezine of ePhilanthropyFoundation.org.
Finding Information on Charitable Organizations
The following organizations and websites provide a variety of information 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 that provides information on hundreds of organizations. Free registration required for detailed information.
Resources for Becoming a More Informed Donor
All three organizations in the previous section offer 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 resources on giving, volunteering and accountability.
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.
Public Safety Fund-Raising Appeals: Make Your Donations Count provides information from the FTC.
Prepared for Corning Credit Union by Remar Sutton & Associates, November 2003. Reviewed and updated March 2007. All rights reserved.
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