How to research a charitable organization
Don Quixote said "doing good to base fellows is like
throwing water into the sea." With that in mind, you want to make
sure the dollars you peel from your hard-won wad wind up in the
hands of those who need charities, rather than those who run them.
After all, Americans are extremely generous, with 1998 personal
giving nearly $135 billion. But no one likes to give foolishly.
When contemplating a donation, you'll first want to
make sure the organization isn't an out-and-out sham (see "stuff"
box). But even legitimate groups should be investigated to be sure
your money will be used wisely, and several watchdog organizations
- Evaluating 400 charities, Manhattan-based
National Charities Information Bureau
helps contributors make sound giving decisions. Go to their Web
site to see which charities meet NCIB's "Standards in Philanthropy,"
to order a more detailed report ($9.95 each), or to request NCIB's
free "Wise Giving Guide."
- The Philanthropic Advisory Service of the
Better Business Bureau reviews the organizations for which they
get the most requests. Their "Give
But Give Wisely" newsletter is packed with information.
- The American Institute of Philanthropy in
Bethesda, Md., grades hundreds of charitable organizations. Their
phone number is (301) 913-5200.
Keep the following in mind when evaluating a group
for a potential donation:
- Tax status. To find out if an organization
is tax-exempt, head to the IRS
site. Click "search," and enter the name and location of the
organization. If the IRS deems it eligible to receive tax-deductible
contributions, it'll be in Publication 78, which will show up
in your search.
Even if an organization has a tax exemption, that's
no guarantee a donation is tax deductible. A tax ID number doesn't
mean diddly in relation to your tax deductions. Make sure it's explicit
that this donation is tax deductible -- unless you don't care.
- The true cause. Names of organizations can
be misleading. Be sure you know that your donation is going to
a group that actually does work that you support.
- Percentages. It costs money to run an organization
and to raise funds. But you want as much of your donation as possible
to go to the right people, endangered animal or cause, rather
than some CEO's salary. The BBB recommends that at least 50 percent
of a charity's proceeds go toward charitable work, rather than
fund raising or administration, while the NCIB requires a more
stringent 60 cents of each donated dollar go toward the cause.
Be careful of a group that uses only a share of the profits for
their good works -- that's different and nowhere near as generous.
Find this type of giving info from the above watchdogs,
or by asking the charity directly. They are required to give you
a look at their annual Form 990 tax return, which breaks down how
an organization spends its revenue, from fund-raising events and
salaries to actual charity. Avoid any charity that won't share this
|Warning signs that a charity may not be
|Look-alike name. Some less-than-wholesome
organizations use names similar to a well-known charity.
|P.O. Boxes. If you are unable to find a
street address, forget about them.
|High-pressure requests. Don't be pressured
into making a quick decision.
|Any group unwilling to provide information
about its tax status or accounting.
You can also get this information directly from the
IRS. Send $1 and the name of the organization to IRS Service Center,
PO Box 9941, Ogden, UT 84201.
If an organization isn't followed by one of these
watchdogs or is local to your area, fear not, good person. Ask the
charity directly for its Form 990, and be particularly alert for
the warning signs mentioned here. The charity's brochure should
give you a clear idea of the charity's purpose, where the recipients
are located and the proportion of its donations that goes toward
good works and how much goes to other things.
One last caveat: No matter how legit and worthwhile
the cause, don't forget to get a receipt for tax purposes.
-- Posted: Dec. 21, 1999