Choosing a Charity
Choosing a Charity
by Mindy Propst, Center Director
Easter Seals Adult Day Services
With the year coming to a close, many people's thoughts turn towards charitable giving-both because of the holidays and the tax break come April. With so many charities to choose from, how can you make sure you've picked the right charity for you? A little homework will go a long way.
Charitable giving is a very personal choice. Before you break out the bank book, consider what charities match your personal beliefs and values. Consider:
* What is important to you...the environment, the elderly, the homeless, children, families, animals, a particular illness?
* Where is it important the charity works...locally, nationally, internationally?
* How does the charity work...providing direct services to people in need, providing education, advocating for social change?
After you decide what issue is close to your heart, where you want the charity to work, and the type of work you want the charity to perform, it will be easier to pick the right charity. There are a number of websites you can use to help locate a charity as well as to research the legitimacy and financial status of a charity. A few places to start include:
With so much fraudulent activity these days, it is important to verify the legitimacy of a charity before you give. Many times larger, more established charities have name recognition making it easier to feel safe making a donation. If you've never heard of an organization, ask to see its letter of determination or, if it's faith-based, an official listing in a directory for its denomination. Other questions to verify its legitimacy may include:
* Is there an annual report and/or newsletter?
* Is there a clear mission statement and description of programs and services?
* Is there a list of people and businesses that support the organization?
* Is there a report regarding the number of people served?
For many, knowing a charity is legitimate isn't enough. People want to know their money is being used wisely. Therefore, evaluating a charity's financial status and accountability may be important to you. A charitable organization's financial statements should show categories of income and expenses and offer a clear breakdown of dollars spent on direct services versus fundraising or administrative costs (often called "overhead"). The Better Business Bureau Wise Giving Alliance recommends the charity should:
* Spend at least 65% of total expenses on program service activities, and
* Spend no more than 35% of related contributions on fundraising expenses.
* Have unrestricted assets available for use that are no more than 3 times the size of the past year's expenses OR 3 times the size of the current year's budget, whichever is higher.
Once you've done your homework to identify and verify the right charity for you, the BBB Wise Giving Alliance also recommends the following safe giving tips:
* Do not give cash. Always make contributions by a check payable to the charity, not an individual collecting the donation.
* Keep receipts, canceled checks, and bank statements as a record of your gift, which will be needed at tax time.
* Watch out for names that look impressive or that closely resemble the name of a well-known organization.
* Appeals received by mail should not resemble bills or invoices, especially for unordered merchandise such as stamps, greeting cards, or pens.
* Know the difference between "Tax Deductible" and "Tax Exempt." Tax deductible means the donor can deduct contributions on his or her federal income tax return. These are generally organizations that receive a "Letter of Determination" from the IRS as a 501 (c) (3) under the Internal Revenue Code. Tax exempt means the organization does not have to pay taxes-generally organizations are tax exempt under sections 501 (c) (4), 501 (c) (6), and other sections of the Internal Revenue Code. Only donations to a 501(c) (3) are tax deductible as a charitable donation.