March 21, 2014
When my husband and I give, we often give locally. We are familiar with the nonprofits in our community and their reputations. Very often, we know people who work at the organization or serve on the board. We might even be a volunteer. Our familiarity allows us to feel confident when we make a financial gift because we know the organization is legitimate.
But, how do we give with confidence to an organization we don’t know well? When we give, we want to ensure that our dollars are being used legitimately and effectively. Here are some tips we employ at the Community Foundation. These tips will help you ensure that your gift is being maximized and used properly.
Be informed. Before you give, ask questions. Request the organization’s tax exempt status and review its financial reports. This information can be found on the organization’s 990 report, or nonprofit ‘tax return’. You can also review nonprofit organization’s ratings at websites including:
- www.give.org, administered by the Better Business Bureau’s Wise Giving Alliance, reports on how well a charity governs its organization, how it spends its money, how truthfully it represents itself to donors and how willing it is to disclose information.
- www.charitynavigator.com offers a star rating system based on a charity’s financial health, accountability and transparency.
- www.guidestar.org maintains a database on the programs and finances of more than 1.8 million IRS-recognized nonprofits and provides tools that allow you to analyze this data.
Keep good records. If you’re deducting your charitable donations, remember that the IRS requires a tax-deductible receipt for gifts over $250 issued by the organization. If your gift is less than $250, a canceled check or credit card receipt is sufficient.
Understand how much of a donation is deductible. If you receive something for your gift, such as dinner or an item, the amount of your tax deduction is reduced by the fair market value of that item. For example, if you attend a wine tasting or fundraising dinner for a nonprofit, your tax deduction equals the cost of the ticket minus the cost of the meal and beverage. If you’re not sure, the nonprofit’s staff can assist you in calculating your tax deduction.
Make it anonymous. Many organizations, like the Community Foundation, publicly record donors. If you would prefer, you can always request that your donation be kept confidential.
Find other ways to give. There are many creative and beneficial ways to give such as bequests, gifts-in-kind, securities and trusts. A professional advisor can help you navigate alternative giving options.
If you have any questions about giving, please call me at 803.254.5601 x323 and I’ll help you find the answer.