Philanthropy: It’s a two-fold benefit for the gifter since a) there’s usually a good cause benefiting from the donation and b) there’s a potential the gift is eligible as a deduction at the end of tax season.
But, did you notice a keyword I used in the first sentence above? “Usually?” Like all money management areas, the giving of our finances must too be properly channeled — scams abound.
Typically, the charities that wealthy donors give to are well-known, publicly-vetted institutions with plenty of transparency. However, once in awhile a criminal enterprise veiled as a goodwill cause targets benevolent circles — and their checkbooks.
Know your cause
I like to impart a few thoughts, or questions, to my clients before they donate — what I call the Four Rs: Have you done your Research? What’s the charity’s Reputation? Does the charity or nonprofit in question get Results? Is there a prior established Relationship?
One of the most credible resources to consult is right at your own fingertips on the internet. Guidestar is widely regarded as a primary go-to source for up-to-date, comprehensive data on nonprofits. Additionally, consult with the Federal Trade Commission on legitimacy issues.
And reputation? Have there been any scandals? Searches under Google’s general and news options can vet ethics questions fairly quickly. Or simply ask other people.
Finally, are the charitable organizations you are interested in getting acceptable results? Do they maximize a donor’s gift for its cause? Ask a representative of the charity to show documentation for the previous two or three years and check it out for yourself.
Unsolicited donation requests
It’s not unusual for a nonprofit to be proactive.
But, when receiving phone calls from someone claiming to represent any nonprofit, exercise caution. Scam artists impersonating representatives of credible charities are an unfortunate, year-round nuisance.
Politely ask them to mail a hardcopy of their request. If they pressure you or ask for details — like a social security number — those are red flags; hang up.
In general, it’s just a good rule of thumb to never give over the phone.
Deciding how much to give can be tough — a little or a lot? Cash or not? Would an in-kind gift, such as an asset, be better than cash?
This can be dictated by the needs of the charity. If it is new and legitimate, the organization might benefit more by cash. More established organizations will know how to utilize or liquidate property or fine art intended to be sold and turned into cash.
The question of amount may also be dictated by taxation category brackets, or, for those seeking last-minute tax deductions.
In the end, however, it really is up to the gifter. Apply some common sense and stick to some of these points and navigating new charities shouldn’t be tough, but will instead bring a sense of inner satisfaction.