Charitable
Donations: Give or Take
You
may have contributed a portion of the $143 billion raised for charities in 1995.
Unfortunately, an estimated $1.43 billion of
that amount may have been misused or ended up in the pockets of fraudulent
solicitors. With more than half a million federally recognized charities
soliciting for charitable contributions, it pays to be cautious when making a
donation. Asking questions about the nature and activities of the organization
is the only way you can be sure the money you contribute will support worthwhile
causes.
Paid
Fund-Raisers
Some
charities find it more efficient to pay professional fund-raisers to handle
large scale mailings, telephone drives, and other solicitations rather than
their own paid staff or volunteers. Professional fund-raisers are in business to
make money and can legally keep a portion of the money they collect. If you’re
solicited for a donation, ask if the caller is a paid fund-raiser and what
percentage of your donation the fund-raiser will keep. If you’re not
comfortable with the amount, you may want to consider other options for
donating.
Charity
Checklist
Whether
charitable organizations use their employees, volunteers, or professional fund-
raisers to solicit donations by phone, mail, or in person, consider the
following precautions to ensure that your donation dollars benefit the people
and organizations you want to help.
Ask
for written information, including the charity’s name, address, and telephone
number. A
legitimate charity or fund- raiser will give you materials outlining the
charity’s mission, how your donation will be used, and proof that your
contribution is tax deductible.
 | Ask
for identification.
Many states require paid fund-raisers to identify themselves as such and to
name the charity for which they’re soliciting. If the solicitor refuses,
hang up and report it to local law enforcement officials.
| Call
the charity.
Find out if the organization is aware of the solicitation and has authorized
the use of its name. If not, you may be dealing with a fraudulent solicitor.
| Watch
out for similar sounding names.
Some phony charities use names that closely resemble those of respected,
legitimate organizations.
| Know
the difference between "tax exempt" and "tax
deductible."
Tax exempt means the organization doesn’t have to pay taxes. Tax
deductible means you can deduct your contribution on your federal income tax
return. Even though an organization is tax exempt, your contribution may not
be tax deductible. If deductibility is important to you, ask for a receipt
showing the amount of your contribution and stating that it is tax
deductible.
| Beware
of organizations that use meaningless terms to suggest they are tax exempt
charities. For example, the fact that an organization has a "tax I.D.
number" doesn’t mean it is a charity: all nonprofit and for profit
organizations must have tax I.D. numbers. And an invoice that tells you to
"keep this receipt for your records" doesn’t mean your donation
is tax deductible or the organization is tax exempt.
| Be
skeptical if someone thanks you for a pledge you don’t remember making.
If you have any doubt whether you’ve made a pledge or previously
contributed, check your records. Be on the alert for invoices claiming
you’ve made a pledge when you know you haven’t. Some unscrupulous
solicitors use this approach to get your money.
| Ask
how your donation will be distributed. How
much will go to the program you want to support, and how much will cover the
charity’s administrative costs? If a professional fund-raiser is used, ask
how much it will keep.
| Refuse
high pressure appeals.
Legitimate fund-raisers won’t push you to give on the spot.
| Be
wary of
charities offering to send a courier to collect your donation immediately.
| Consider
the costs.
When buying merchandise or tickets for special events, or when
receiving free goods in exchange for giving, remember that these items cost
money and generally are paid for out of your contribution. Although this can
be an effective fund-raising tool, less money may be available for the
charity.
| Be
wary
of guaranteed sweepstakes winnings in exchange for a contribution. You never
have to donate anything to be eligible to win.
| Avoid
cash gifts that can be lost or stolen. For
security and tax record purposes, it’s best to pay by check. Use the
official full name of the charity — not initials — on your check. Avoid
solicitors who want to send a courier or use an overnight delivery service
to pick up your donation.
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Charity
Check-Up
Many
charities use your donations wisely. Others may spend much of your contribution
on administrative expenses or more fund-raising efforts. Some may misrepresent
their fund-raising intentions or solicit for phony causes.
Before
you open your checkbook, check out the charity you’re considering with these
organizations:
Philanthropic
Advisory Service
Council of Better Business Bureaus
4200 Wilson Boulevard, Suite 800
Arlington, VA 22203-1838
(703) 276-0100
National
Charities Information Bureau
19 Union Square West, 6th Floor
New York, NY 10003-3395
(212) 929-6300
American
Institute of Philanthropy
4905 Del Ray Avenue, Suite 300
Bethesda, MD 20814
(301) 913-5200
Your
Local Charity Registration Office
Most states require charities to be registered or licensed by the state. Check
with your state Attorney General’s office or Secretary of State.
Many
smaller, newer, or local charities may not be rated by the organizations listed
here. Some fraternal organizations, such as police and fire groups may not be
rated at all. If the charity seeking your donation is not listed or rated,
follow the precautions listed under Charity Checklist to help you determine
whether an organization deserves your donation dollars.
For
Complaints and More Information
If you
believe an organization may not be operating for charitable purposes or is
making misleading solicitations, contact your state Attorney General or your
local consumer protection office.
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