Charitable Giving: Doing Your Due Diligence
When it comes to filing taxes, donating to charities is a win-win situation. You get to aid a cause you care about while also being able to claim dedications on monetary donations. But what if the charity to which you've donated is a scam? You've now donated to a fictitious organization, haven't aided the cause, and won't be able to deduct it from your taxes.
Authentic non-profits can now expand their influence further than ever before thanks to the ease with which information can be shared online. However, it also means that fraudulent schemes can emerge and spread quickly. This type of situation can arise at any moment, although it is most common amid disasters.
In other occasions, organizations have mismanaged large gifts or do not appropriately allocate funds.
Consider these suggestions to see if the charity you're considering donating to is making a difference.
Check the Legitimacy
Before donating, check the charity’s name against a credible database. The IRS Tax Exempt Organization Search Tool can help you confirm that you can write off your donation. If you’re donating to an American organization, check their 501(c)(3) status. Other sorts of organizations accept contributions and allow you to deduct them, although they vary, and the deduction offered is sometimes a commercial deduction rather than a charitable gift. In either case, a legitimate charity must be able to collect tax-deductible gifts.
Check the URL when looking up charity on the internet. Rather than.com or.net, many charity URLs finish in.org. Check for missing or extra letters and double-check the spelling.
You’ve Got Mail
If you get an email purporting to be from a charitable organization, mark it as spam and delete it. Do not download or open any attachments if the email invites you to do so. It's possible that those files include a virus designed to steal your personal information..
The only exception is if you receive an email from an actual organization that you have donated to previously.
Always Get a Receipt
It's critical to get confirmation of your donation, especially if you give more than $250. This is the IRS's proof-of-donation cutoff. While a canceled check can be used as proof, it may be more difficult to do so when contributing online. A receipt from the organization should always accompany any donation of $250 or more.
Even if a charity seems legitimate, it may not be effectively helping the cause(s) it represents. You have the right to ask to see annual reports and documentation to see how a charity allocates its funds. The Charities Review Council recommends that at least 65% of a charitable organization’s total expenses go toward its programs.
However, keep in mind that many organizations would not exist if it weren't for the people who give expertise, manage programs, and keep track of funds. Overhead is vital, but make sure it isn't the main purpose for which donations are given.
If you believe a charity you’ve seen or have donated to is a scam, report it to the Federal Trade Commission at 1-877-382-4357, or use their Online Complaint Assistant. You can also report questionable emails and websites to the FBI’s Internet Crime Complaint Center.
By spending a few minutes researching, you can help ensure your money is going to a worthy cause that will use it wisely.
This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2023 Advisor Websites.