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Check Out
Charities
Before You Give
By Andrew Leckey
As
the final deadline draws near for making 2002 charitable contributions,
there's little surprise that Americans aren't reaching for checkbooks
quite so readily this time around.
Nearly half the country's
non-profit organizations have experienced a decline in contributions
compared to last year, according to a survey by the GuideStar
research firm. Another 20 percent say donations have remained
flat.
The long list of reasons
for this includes a decline in stock valuations, a weak economy,
lost jobs, a discombobulated world and a church sex abuse crisis.
Overshadowing them
all, however, is a general wariness about all organizations and
concern over how our money is handled. This was initially prompted
by the corporate debacles of Enron and WorldCom, but accelerated
with publicized examples of charities flunking their accounting
tests.
A number of regional
United Way organizations, for example, recently got into hot
water because some contributions received were counted more than
once, inflating their totals and those of the entire system.
Methods of reporting administrative expenses were also called
into question.
This comes a year after
the American Red Cross was lambasted for how it directed money
donated for victims of the Sept. 11 terrorist attacks. That organization's
chief executive was forced out due to differences with her board
over the response to the attacks.
"Donors have become
more suspicious and are giving less this year in part due to
scandals and controversies," acknowledged Suzanne Coffman
of GuideStar in Williamsburg, VA. "Yet while there is a
problem that non-profit accounting standards aren't as uniform
as people think, most charities are ethical and honest and I
do not really believe there is widespread fraud."
Many good causes are
struggling because foundation grants and corporate gifts have
dried up. Worthy organizations find themselves with less money
at a time their services are most needed by the people they seek
to serve. It doesn't make sense to stop contributing to causes
that make this world a better place just because the world may
have been disappointing lately.
Identify your own values,
compare suitable charities, obtain full information, select those
you wish to support and then budget an amount appropriate for
your family. If you contribute cash, your total deductible contributions
for the year can total up to 50 percent of your adjusted gross
income.
You can check the legitimacy
of 850,000 non-profit organizations on GuideStar's Web site at
www.guidestar.org. Groups either indicate their IRS registration
or, in the case of those that are faith-based, give proof of
status as tax-exempt organizations. Those with income above $25,000
file IRS Form 990, which reports income and expenditures. Again,
faith-based non-profits are not required to do so.
Giving shouldn't be spur-of-the-moment. Donors are duped this time of year into giving money to "sound-alike" organizations named to resemble well-known charities.
"Most individuals unfortunately base charitable giving decisions entirely on the appeal they receive and don't bother to go to outside sources or ask for additional information," cautioned Bennett Weiner, chief operating officer for the Better Business Bureau's Wise Giving Alliance watchdog group in Arlington, Va. "Watch out for overly emotional appeals because emotion is sometimes used as a ruse to get you to give without investigating further."
On its www.give.org Web site, the Wise Giving Alliance posts 500 detailed reports on national charities evaluated according to its 23 charity standards. You can also contact your local Better Business Bureau for information on regional and local charities that have been evaluated.
The alliance expects charities to produce a voluntary annual report and, in the case of those with more than $100,000, a voluntary audited financial statement that's more detailed than an IRS Form 990. It believes total fundraising costs of a charity should not exceed 35 percent of total contributions raised.
Every charity should give you a general breakdown of where it spends money.
"Tax exempt" means the organization doesn't have to pay taxes, while "tax deductible" means you can deduct on your federal income tax return. Even if an organization is tax exempt, your contribution may not be tax deductible.
Save all canceled checks. For cash donations of $250 or more, also obtain a written receipt from the organization with its name, the date, place of contribution and amount given. If you send your check by mail, it's good so long as you send it no later than Dec. 31.
"If you're short on cash, one way to make a contribution and get the deduction this year is to charge it to your credit card," explained Martin Nissenbaum, national director of personal income tax planning for Ernst & Young in New York. "You'll get a deduction in the current year even though you don't pay your credit card bill until next year."
