What You Need to Know Before Donating

I’m amazed at the outpouring of support for Haiti since a devastating earthquake ravaged the nation’s capital, Port Au Prince, on Jan. 12. Between social networking sites, regular Websites, and even e-mail groups, people have sprung into action donating money, supplies, and staple goods to various organizations for Haiti relief. However, I am also well aware that in any tragedy where people open their hearts, there are also scoundrels ready to take advantage of the public’s kindness. Well, before you give to any organizations, here are a couple of tips to help you maximize your donation and make sure your money is going to the right place.

Check for legitimacy. Before donating to any organization, even some of the more established groups, it’s imperative that you know that the organization is legit and not a backyard operation looking to take advantage of your kindness. Second, make sure you understand where your money is going. As a business reporter, I usually refer to Guide Star when researching a nonprofit. You have to sign up on to look at an organization’s financial information, but it’s free and well worth the seven minutes it takes to become a member. Guide Star allows you to look at an organization’s 990 tax form which itemizes its expenses, salary for top executives, and operating budget. From this form you can actually determine how much of the donations go to programming and how much go toward administrative and overhead expenses. Guide Star is one of the many companies that offer such services. You can also check out National Association of State Charity Officials and the BBB Wise Giving Alliance.

Figure out the tax status. There is a difference between “tax exempt” and “tax deductible.” According to the Federal Trade Commission (FTC), tax exempt organizations do not have to pay taxes. But that does not necessarily mean that your contribution to them is tax deductible. A tax deductible donation means that you can deduct it on your federal income tax return. If a tax deduction is important to you, ask for a receipt showing the amount you contributed and make sure it states that all donations are tax deductible, says the FTC. Read more at Black Enterprise

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