Charities & Nonprofits:
Giving to Charities

You may get a letter or a phone call. You see starving kids on television, or someone knocks on your door. The needs are pressing, and their stories are convincing. You reach for your checkbook, wallet, or credit card. STOP! First, sit down, take a deep breath, and think about what you're doing. Give wisely.

A savvy consumer knows how to ask the right questions and do a little homework. The same precautions are essential before making donations. The following are some good questions to ask before you give.

Who wants your money? If you are unfamiliar with the charity, get its full name, address, and telephone number. Many organizations have names that are very similar to well known charities. Ask whether the organization is listed as a tax exempt public charity by the IRS and if your donation will be tax deductible.

How will they use your donation? A dramatic, heart-rending description of general need may get your attention, but you should know more before you give. Find out the substance of the appeal and the planned use of your money. For example, are the organization's main goals education and research, or service and distribution?

If the organization's goal is public education, ask about their program in detail. Some direct mail educational campaigns achieve very good results and may be an appropriate use of your money. Be aware, however, that some organizations print a few facts in the fundraising literature they mail to you and call the "mailing and printing expenses" costs of public education.

What percentage goes toward true charitable purposes? Ask for written information that shows you a comparison of how much money the organization spends on administrative fees, fundraising and expenses versus how much it spends directly on the intended recipients or projects of the charity. You may want to compare the administrative costs, fees and expenses for several charities before deciding which charities to support.

Watch Out for These Red Flags

High Pressure Phone Calls: A legitimate charity will be glad to give you the time needed to check it out.

Prizes: Most honest charities do not try to entice you to give by telling you that you have won a prize when you haven't even entered a contest.

Avoidance of the U.S. Mail: Dishonest individuals usually try to avoid doing any business through the U.S. mail to avoid federal prosecution under postal statutes. Instead, they will insist on using a private courier service or picking up your check themselves.

What to Keep in Mind When Giving:

• Get information in writing from the charity before giving, including an annual report or other financial information.
• Do not give your credit card number out over the phone in response to a phone solicitation.
• Do not respond to letters that say you have pledged money unless you are certain that you did.
• Do not give cash. Write a check in the name of the charity, or if you are giving other property, ask for a receipt.
• Consult an attorney before making a significant gift, whether making such a gift outright, by will or by trust.