Advertisement
spending

6 Things You Need to Know About Giving to Charity

High-tech options make it easy to donate instantly. But do you know where your money is going?

By Michael Stratford

1. Think before you text. From the Japanese earthquake and tsunami to the Joplin, Mo., tornadoes, 2011 has proved to be the costliest year on record for natural disasters across the globe—an estimated $265 billion in the first half of the year alone. In the wake of such devastation, you may feel compelled to act quickly. But you will maximize your gift’s impact if you take the time to research how a charity spends your money.

Advertisement - Article continues below

2. Avoid untested groups. Stick to charities that have a track record for relief work, such as the American Red Cross, Doctors Without Borders and the Salvation Army. Singer Wyclef Jean’s Haiti charity, for example, drew criticism for its lack of infrastructure to help earthquake victims. “Given the nature of disasters, it’s just too much for a new group to jump in and tackle the relief efforts effectively,” says Sandra Mini­utti, of Charity Navigator, which vets charities.

3. Watch out for scams. The high-profile nature of some disasters makes them prime opportunities for con artists. For instance, up to 60% of the 4,000 charity Web sites that cropped up in the wake of Hurricane Katrina could have been phony. Be especially alert for sound-alike names, newly formed sites and forwarded e-mails claiming to be from disaster victims. Think twice before donating money over the phone, and be wary of outlandish claims. It’s disingenuous for a charity to say that 100% of your donation will go to the victims, because even a credit card transaction carries some administrative cost, says Bennett Weiner, chief operating officer of the BBB Wise Giving Alliance. Most reputable charities spend at least 75% on their programs and serv­ices.

Advertisement - Article continues below
Advertisement
Advertisement - Article continues below

4. Do a little sleuthing. If you feel strongly about where your donation should go, you can earmark the money and ask the charity what happens once the specific need is met. Alternatively, consider making an unrestricted gift and let the professionals prioritize the projects that need funding. If you want to see how well the charity is allocating its money, you can check its IRS Form 990 filings, which most nonprofits are required to make public. GuideStar has a searchable database of those documents.

5. Let the pros do it. There are also several organizations that will do the background checking for you, among them the Better Business Bureau and Charity Navigator. GiveWell has evaluated fewer charities, but it provides an extensive analysis of each one. Donating to international charities can get tricky (and you won’t reap any tax benefits), so stick to U.S.-based charities with an international scope, says Miniutti.

6. Claim a tax break. To deduct your donation, you must itemize your deductions. Then confirm that you are giving to a qualified organization. (You can search for the charity on IRS.gov.) Once you make the donation, keep a record. For contributions of $250 or more, you’ll need written acknowledgment from the charity. You must actually pay your pledge before the end of the year for the donation to count in that tax year; checks and charges to a credit card count even if they don’t clear until after December 31.

Advertisement
Advertisement

Most Popular

7 Surprisingly Valuable Assets for a Happy Retirement
happy retirement

7 Surprisingly Valuable Assets for a Happy Retirement

If you want a long and fulfilling retirement, you need more than money. Here are the most valuable retirement assets to have (besides money), and how …
August 3, 2020
Turning 60 in 2020? Expect Lower Social Security Benefits
Coronavirus and Your Money

Turning 60 in 2020? Expect Lower Social Security Benefits

When you file for Social Security, the amount you receive may be lower.
July 30, 2020
How a Second Stimulus Check Could Differ from Your First One
Tax Breaks

How a Second Stimulus Check Could Differ from Your First One

The HEROES Act, which was passed by the House in May, would authorize a second round of stimulus checks. While the new payments would be similar to th…
July 22, 2020

Recommended

Tax-Free Weekend Savings from August 7 to 9
Tax Breaks

Tax-Free Weekend Savings from August 7 to 9

Florida, Iowa, Maryland, Missouri, New Mexico, Ohio, Oklahoma, South Carolina, Texas, and Virginia are holding (or starting) 2020 sales tax holidays t…
August 7, 2020
Sales Tax Holidays in 2020
Tax Breaks

Sales Tax Holidays in 2020

Sixteen states are having sales tax holidays this year. If you plan your shopping around these tax-free periods, you can save big on back-to-school cl…
August 4, 2020
6 Money-Smart Ways to Spend Your Stimulus Check
Tax Breaks

6 Money-Smart Ways to Spend Your Stimulus Check

If you don't have to use your stimulus check for basic necessities, consider putting the money to work for you. You'll thank yourself later.
July 30, 2020
Emergency Funds: How to Get Started
Making Your Money Last

Emergency Funds: How to Get Started

There’s no one-size-fits-all formula for how much you’ll need.
July 30, 2020