February 28, 2013
Oftentimes when we give, we give locally. We know the nonprofits and are familiar with their reputation firsthand. Sometimes we know people who work there or serve on the board. We might even volunteer for the organization. So we feel confident giving financially because we know the organization is legitimate. But what about when you want to support an organization or cause that you don’t know intimately? When we give, we want to ensure that our dollars are being used legitimately and effectively. Use these tips to ensure your gift is being used properly and that you are getting the most out of your charitable efforts. Be informed. Before you give, ask questions. Request the organization’s tax exempt status and review its past annual reports for financial specifics. You can also review nonprofit organization’s ratings at websites such as:
- www.give.org administered by the Better Business Bureau’s Wise Giving Alliance, offers reporting of how well a charity governs its organization, how it spends its money, how truthfully it represents itself to donors and its willingness to disclose information.
- www.charitynavigator.com offers a star rating system based on charity’s financial health and 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. Remember that for gifts over $250, a tax-deductible receipt is required by the IRS for donation confirmation. If it’s less than $250, a canceled check 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 one of our Food and Wine Series events, your tax deduction = the cost of the ticket –minus– the cost of the meal and alcohol. In such a case, Foundation staff will be glad to assist you in determining 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. Other ways to give. There are many creative and beneficial ways to give such as bequests, gifts-in-kind, securities, and through trust instruments. Your professional advisor and Foundation staff can help you navigate alternative giving options.