Napolitano looks at giving.
This is the time of year that we all receive the same email, telephone or direct mail solicitations from charitable organizations asking for a donation to a needy group. There is typically one sure thing; the solicitors are well trained at pulling your heart strings to get you to open up your wallet.
Some of the charities or callers are ones we recognize. Other times, they’re organizations we’ve never heard of. A client recently told me they received a suspicious fundraising call and decided to forward the number to the local police. An officer later informed him the call came from a disposable cell phone – likely not from a legitimate charity but from a scam artist trying to take advantage.
I’m not writing this to thwart your future generosity, but rather to provide guidance on researching an organization before donating your hard earned money.
The first major concern is whether the charity is a legitimate not-for-profit organization. If they aren’t, under an IRS audit, your charitable deduction would be disallowed. To check this, simply confirm their registration at the Secretary of State’s office. But doing this alone is not nearly enough.
For those really wanting to go deep, ask the charity to supply you with their annual report, audited financial statements and IRS form 990. These should tell everything you need to know. Check www.charitynavigator.org, which answers common questions about charities and charitable giving.
Some people prefer donating to well-established charities with huge endowments and reserves. Others donate to smaller, local charities assuming they more desperately need contributions. If you can, go and actually witness the charity in action. Visit their physical location, see their programs live, and talk to the employees and volunteers. You may learn that donating your time is almost as valuable as your money.
Another big issue is the percentage the charity spends toward charitable purposes. You may want to know how much of your contribution actually gets eaten up by fundraising costs instead of its advertised purpose.
Clearly, the higher the percentage of their fund raising that goes towards their charitable purpose, the better. It shouldn’t come as a surprise that organizations using outside telemarketers and fund raising vendors are frequently on the higher end of these cost percentages.
There is unlimited information available about charitable organizations, both printed and online. Giving is good, but even better when you know your donation is being used as you intended.