It’s in our nature to want to help, and there is no lack of good causes to which we can give. In fact, each year more than 60,000 new charities come into existence. Donating is not only a wonderful way to make a difference, but you are often rewarded with the additional benefit of a tax deduction. Unfortunately, not all causes are managed with the best intentions, as every year many are exposed for using donations for everything but the actual cause.
Before you let your heartstrings control your purse strings, we encourage you to consider the following tips:
Tip #1: Details, Details, Details
When you receive a solicitation by phone, mail or e-mail, if you are interested, you should ask for more information about the organization. Be sure you know the organization’s legal name, address and phone number. Then, take the time to research the organization using the internet or other sources. Also, always contact the charity directly to make a donation.
Tip #2: How Your Contribution is Used
According to the Better Business Bureau, it is recommended that at least 65 percent of a charitable organization’s total expense should be used for program services. Although fundraising and administrative costs are necessary for a well-managed organization, donors should expect that a substantial amount of their contributions will be used for program services.
Tip #3: Don’t Give Cash
The best way to donate to a charity is to do so by writing a check. Why? You will have better records for tax purposes and a better sense of security. If you find something wrong with the charity, you may be able to stop payment on your donation. Never wire money to make a donation, because it cannot be tracked.
Tip #4: Don’t Assume the Charity Is Tax-Exempt
One of the added benefits of charitable giving is the ability to write-off the donation on your taxes. Whether or not this is the primary reason for your donation, you should make sure the charity you donate to is tax-exempt.
Generally, contributions to organizations recognized by the IRS as 501(c)3 organizations are tax-deductible, and contributions to most other types of organizations are not. However, there are exceptions. Also, know that when an organization is labeled “tax-exempt,” this does not necessarily mean that the contribution is tax-deductible.
Don’t forget to ask for a receipt in order to claim your donation on that year’s taxes.
Harland Clarke Digital® provides managed email services for several BancorpSouth marketing programs. This content is shared with permission. Any views expressed reflect the opinion of the original author(s).