As so often happens, the original idea for this month's article changed its focus a bit on the way to publication. What started out as an article intended to point you toward vendors that make your charitable contributions for you grew into a much wider topic- How do you give, without making it hurt?
Let's dispel a notion or two that arises from this idea of giving without hurting. In any act of charity, the end result should be win-win. The donor should end up with the satisfaction of giving to a cause they support (i.e. experiencing the joy of giving) and the charitable organization...well let's face it, the charitable organization receives money or something of value to further its mission.
Unfortunately sometimes things go awry and the donor thinks they are giving to a charity when they are not. Or, perhaps you are giving to a charity, but your entire "donation" is not tax deductible. The IRS calls this quid pro quo. That's what we call it too, but sometimes it can be akin to fraud.
Our definition of "hurting", then, is being cheated or not getting what you expected. Of course, there are the times when you buy something at a store and the store promises to give a percentage of its proceeds to a charity. We will discuss some internet sites you may want to go to if this is your preferred method of giving, but our main focus is on using technology to keep you from being robbed.
Total giving in America exceeds $140 billion a year and that's just the reported amount. This suggests that Americans can be quite generous with their assets. It also suggests, to scam artists, that Americans are easy targets. Let's take a look at some of the ways unscrupulous "charities" can get into your pocketbook.
"Hello, this is John Doe 1158 with the local Chapter of Whateverweares. How much does your family's security mean to you..."
Have you ever answered your telephone and heard this or some pitch, akin to it, blaring at you? This is the start of a classic telemarketing scheme. Did you ever wonder who you were talking with? Did you know in some instances that you may be speaking with a commissioned salesperson who in turn works for a company that ultimately passes on only 20% of the funds raised to the intended charity?
If you were not aware of it, many small non-profit organizations use such an approach for fundraising. Depending on your state laws, this may not be illegal, but it is often misleading in several ways.
First, you don't really know that the intended charity really will see all the funds. Maybe you don't expect them to see all the funds, but it's a good bet they won't net out of the effort anything near the percentage you would expect.
Second, if the pitch is offering you something of value (trash bags or tickets to a benefit), it's a safe bet that much, if not all, of the amount paid is not in fact a charitable donation. The Internal Revenue Code states that you do not get a charitable deduction for a "donation" if you receive something of value in return for the payment.
Take, for instance, a benefit concert sponsored by XYZ Charities that has a big name entertainer. If you are charged $25 for the ticket, it's likely that the value of the show would equal the amount you paid. Accordingly, the payment would likely not be a charitable deduction.
Good charitable organizations will tell you up front if the payment will be deductible.
Have you ever received an e-mail asking for donations to help the victims of Typhoon Fleeceme or some other natural disaster? Have you ever received a request for a contribution from any organization with which you have no affiliation - asking for a donation?
Now, let us ask, how many e-mail solicitations have you received from the Salvation Army or any other well-recognized charitable organization if you have never been a donor before? While it is possible, most likely you have not.
This in itself should make you wary of e-mail solicitations. Unfortunately, people have somewhere gained the view that if a thing is on the web, or in their e-mail box, it must be legitimate. Don't believe it! Cyberspace is as full of fraud as is the real world - perhaps even more.
Anytime you receive a request for donation for some cause or another, check out the organization first, before donating. The organization soliciting the contribution may well be legitimate, but then again, it may not..
And don't be fooled by subtle name differences. Sometimes unscrupulous people will use a well-known charity, change it slightly, and solicit funds. For example, the real charity's name American Red Cross might become a fake charity called American Reed Cross. While we know of no instances of this happening with the American Red Cross, it does give you an idea of what a con artist may do.
Please also remember that criminals still use the U.S. Mail and face to face solicitation for just the same thing as we have discussed above.
How do I protect myself?
If you run into a situation where you don't know the person on the other end of the line, or e-mail, the first thing you should always do is nothing. If you are talking to someone from a reputable charity, they will understand when you politely ask for a description of their organization or literature on its purpose. Ask for information to be sent to you, along with the pledge card. Most charitable organizations are happy to comply.
You may also want to check out the existence of the charity by reference to an on-line source of information. This is perhaps the easiest way to obtain quick information. Some of the on-line sources you may wish to visit are:
- Internal Revenue Service - This site contains a searchable database of organizations contributions to which are deductible.
- National Charities Information Bureau - This site contains a listing of 400 charities that the NCIB has ranked based on its standards of what makes a good charity. You can also order reports on the charities evaluated by NCIB for a $9.95 fee.
- Council for Better Business Bureaus - This site is part of the Philanthropic Advisory Service of the Council for Better Business Bureaus. Like the NCIB site, you can obtain reports on selected charities. Although there are fewer than 200 listed on the site, the reports can be accessed on-line.
Of course, you can always check with the Better Business Bureau in your area for information regarding charitable organizations.
The private sites mentioned above also have tips on how to further protect yourself against charitable fraud.
At the beginning of the article, we said we would give you some web sites where you could give without spending a dime. These are sites that have either teamed up with particular charities, or sites which will donate to any charity, to pay the charity part of the its gross sales. While this is a convenient way to give, be aware you really have no specific assurance your charity will receive the funds. You also do not necessarily receive a charitable contribution deduction because you are in essence shopping, that is to say, making a personal expenditure, not a donation. You will need to review the terms of the web site to determine deductibility.
Some well known sites, if you wish to investigate them are:
While these are not the only sites, visiting them will give you an idea of what these charitable "shopping malls" are and how they work. We do not necessarily endorse these web sites.
With the rise in charitable giving, charitable fleecing has also flourished. One of the most effective ways to protect yourself is to investigate a charity thoroughly before giving to it. While there are a variety of sources, you can gain a good idea of what the charity does by investigating the charity on-line. You also have the opportunity to donate to your favorite charity through charitable "shopping malls" on-line, but your purchase may not be deductible.
Whatever charitable vehicle(s) you may use, be certain you are giving to your charity of choice. Don't allow con-artists to hurt you by taking away your joy of giving.
Have a great month.