As the year comes to a close, charities are stepping up their fundraising efforts, starting with Giving Tuesday campaigns. While philanthropy is a wonderful way to promote causes about which you care deeply, there have continued instances of fraud associated with this time of year. The IRS has raised the red flag about charitable scams, especially those that use recent disasters and tragedies to try and steal money or extract private information from well-intentioned people. “Their schemes include contacting people by phone, social media, email or in person and pretending to be from a charity that helps disaster victims.” The increase in fraud means that you need to do a little work, before you give. Start by confirming the group’s name to determine it’s legitimate. Even if it is a genuine non-profit, there could be a case of mistaken identity. There are hundreds of organizations devoted to children or cancer, so go to the group’s website to see how it spends its money. You can also see what others say about the organization by going to the Better Business Bureau’s (BBB) Wise Giving Alliance, Charity Navigator, Charity Watch, and GuideStar.
The Federal Trade Commission recommends that you just say NO to any solicitation if the representative asks for money, but refuses to give you full details about the group’s identity, mission, costs and how it will use your donation; uses high-pressure tactics, like trying to get you to donate immediately, before you can do research or think it over; asks you to send cash or use a money transfer; offers to send a courier or overnight delivery service to collect the donation immediately; promises to enter you in a sweepstakes or give you a prize for donating; won't provide proof that a contribution is tax deductible; uses a name that closely resembles that of a better-known, reputable organization; or thanks you for a pledge you don’t remember making.
To ensure that you are donating to a qualified charity, which is entitled to a tax deduction, you can use the Exempt Organizations Select Check tool at IRS.gov. You can also find legitimate charities at fema.gov. Officials note that you should never provide your Social Security number, credit card and bank account numbers or passwords to anyone who solicits a contribution from you. If you think you’ve been the victim of a charity scam or if a fundraiser has violated Do Not Call rules, file a complaint with the Federal Trade Commission.
Once you have determined that the organization is legitimate, you will want to know that its finances are healthy and that it is efficient, ethical and effective. Charity Navigator provides 0 to 4-star rating system, which includes a review of each charity’s fiscal performance. The site also helps you understand what portion of your donation goes to support overhead, versus goes to the cause itself.
If the donation qualifies and if you itemize your tax deductions, charitable contributions made to qualified organizations may help lower your tax bill. Procrastinators take note: to qualify for write-offs of charitable contributions, your payments must be postmarked by midnight December 31st -- just writing “December 31st” on the check does not automatically qualify you for a deduction; and pledges aren’t deductible until paid. Donations made with a credit card are deductible as of the date the account is charged.
You should maintain a bank record or written communication from the organization containing its name, the date and amount of the contribution. For text message donations, flag the telephone bill with the name of the receiving organization, the date of the contribution, and the amount given.
All of this may seem like a little more work than you might have hoped, but your time and generosity will pay long-term dividends.