7 Smart Tips for Charitable Giving
December 10, 2012 - Posted By mjones
Every year, millions of dollars are donated to help our nation’s returning troops, and yet much of that money never actually reaches veterans. Nonprofits assisting the rehabilitation of veterans are the most susceptible to fraudulent activity. Time and time again veteran nonprofits are reported to be lining their own pockets with donations rather than giving to veterans.
Help veterans by doing your homework. Our nation’s veterans deserve our due diligence. Here are some tips to consider before giving generously to the veteran nonprofit of your choice:
1. Educate Yourself
Never give to a charity you know nothing about. Nonprofits are required to release annual reports about activities and spending. You can access these documents online or request information directly from the charity. Ask questions before you give. If the charity does not provide the information you request, think twice before donating.
2. Follow the Money
When inquiring about a charity, ask how much of its donations go to general operations and fundraising and how much is left over for the services you want to support. According to CharityWatch, a good percentage to keep in mind is 40%-60%. That is, 40% of your donation should go towards the charity’s administration and the rest towards program services. It’s reasonable to expect that at least 60% of your donation will go directly to the service you wish to support. Note, however, that CharityWatch deems that highly efficient charities are able to operate effectively with 75% or more of donations going towards program services.
3. Beware of Look-Alikes
Scam organizations often use names that sound similar to reputable and respected nonprofits. If you are suspicious of a look-alike, ask for written material about the charity and check sites like CharityWatch and CharityNavigator for more information.
4. Do not give cash
For your own security and for your tax records, send a check. Be sure to get a receipt or printed copy of the check. Keep a record of all your donations.
5. Know “Tax Exempt” vs. “Tax Deductible”
Donating to some tax exempt organizations does not necessarily mean you will receive a tax deduction. “Tax exempt” means the organization does not have to pay taxes. “Tax deductible” means the donor can deduct contributions to the charity on his or her federal income tax return. Some organizations may use terms like “tax ID number” or “keep this receipt for your records,” to imply that you will receive a tax deduction on your donation. Request for a copy of the charity’s tax exempt letter with the IRS. If the organization has no such letter, you cannot legitimately claim your donation as a tax deduction.
6. Don’t Be Fooled By Gifts
Charities often send out direct mail solicitations with “gifts” such as address stickers or greeting cards. Do not feel obligated to make contributions in return for these “gifts”. It’s against the law for a charity to demand payment for any unordered merchandise. Also keep in mind that these enclosed materials often mean the organization has high fundraising costs.
7. Consider Other Ways to Give
Giving a money contribution is not the only way to give back. Consider giving charitable gift annuities, gifts in-kind, endowments or even your old vehicle! Also consider donating your time. Volunteering and relaying your personal skills can be just as valuable to nonprofits as financial contributions.
For more information about Vets Vehicles and our charitable activities and finances, please visit vetsvehicles.org.