Things to Know Before Making a Charitable Contribution

I think we all agree that giving to charitable organizations is a good thing. There are many worthwhile charities that help our underserved populations and help provide relief in times of crisis. Charitable giving can also provide a deduction at tax time. Unfortunately, the news has recently been filled with reports of charitable organizations who have been using donated funds for lavish lifestyles and improper purposes. So how is one to know if a charity is reputable and worthy of your donation?

These days, charities and fundraisers (groups that solicit funds on behalf of organizations), use the telephone, email, internet, social networking sites, and mobile telephones to solicit and obtain donations. Scammers also use these same methods to take advantage of trusting individuals. Regardless of how you are contacted, here are some telltale signs that the “charity” is a scam:

  • They refuse to provide detailed information about the charity’s identity, mission, costs, and how the donation will be used
  • They refuse to provide proof that a contribution is tax deductible
  • They thank you for a pledge that you don’t remember making
  • They use high pressure tactics like trying to get you to donate immediately, without giving you time to think about it and do research on the organization
  • They ask for donations in cash or ask you to wire money

If any of these warning flags arise, the charity is probably not legitimate, and you should not make a contribution.

In addition to being aware of the above facts, there are some steps you can take to investigate charities that you are thinking of supporting. One easy way is to simply type in the name of the charity and the words “complaint” or “scam” in your internet search engine. If the charity is a scam, you will undoubtedly uncover a list of complaints. You can also contact the Better Business Bureau’s Wise Giving Alliance, the Charity Navigator, Charity Watch, or Guide Star, all of which are organizations which monitor and report on charitable organizations. You can visit the Internal Revenue Service website, which maintains a database of all charitable organizations which are entitled to receive tax deductible contributions. If the donation request comes from a group that is claiming to help your local community, for example, your local police or firefighters, ask the local agency if they have heard of the group and are getting financial support.

The Federal Trade Commission website contains information to help donors investigate charities and to file complaints against fraudulent charities. Charitable giving is a worthwhile endeavor, just make sure that you are giving wisely.