Denver, CO – December 29, 2011 – As 2011 closes out, charities are making a final push for donations, and donors are scrambling to make tax-deductible contributions before the year ends. The Better Business Bureau (BBB) warns patrons to make several considerations before giving their last-minute donation.
“We may be rushed to give to that one last charity in order to deduct it from our taxes, but donors need to take the time to ensure the charity is reputable – and that the donation actually is tax-deductable,” said Dale Mingilton, president and CEO of the BBB Serving Denver/Boulder.
Many tax law provisions have changed in recent years and the BBB recommends donors to educate themselves on all IRS rules to avoid surprises come tax time.
The BBB also recommends donors to ask the following five questions before giving:
1) Is this a charity I can trust?
Look at the appeal carefully; some charities’ names sound the same. Do not be fooled by names that look impressive or that closely resemble the name of a well-known organization. A common scheme used in charity fraud is name-pirating of well-known organizations to gain the trust of donors. Check it out first. If someone says they are with the Red Cross, for instance, contact the Red Cross directly and verify that who you spoke with or what you receive really is affiliated with them. Also, visit the BBB’s website www.denver.bbb.org/charity to find out whether the charity meets the 20 BBB Standards for Charity Accountability. These standards address charity governance, finances, fund raising, donor privacy, and other accountability issues.
2) How will the charity use my donation?
Ask questions about how your donation will be used. Beware of appeals that bring tears to your eyes but tell you little about what the charity is doing about the problem it describes so well. For example, if the charity says it is helping the homeless, do they explain how and where this is taking place? (Shelter, food, medical care, etc.) Watch out for statements such as “all proceeds will go to the charity.” This can mean that only the money left after expenses, such as the cost of written materials and fund raising efforts, will go to the charity. These expenses can be high, so check carefully.
3) Is my donation tax deductible?
If you want to take a charitable deduction for federal income tax purposes, make sure the organization is tax exempt as a charity under section 501(c)(3) of the Internal Revenue Code. A charity appeal will usually include a reference to this. To verify a charity’s tax status, access an IRS database of organizations by viewing Publication 78 on the IRS website at www.irs.gov.
4) Can the charity actually use what I am donating?
All charities welcome the receipt of monetary donations, but some also solicit in-kind donations such as clothing, food, and toys. If you are planning to donate items to a worthy cause, make sure you know the in-kind contributions your charity prefers. For example, a food bank may prefer food items that are not perishable such as canned goods, and a toy drive may be seeking new and not used toys.
5) Am I feeling pressured to give?
Do not succumb to pressure to give money on the spot, either immediately over the phone via credit card or by allowing a “runner” to pick up a contribution. Also, never donate in cash. Always use a check or credit card to document the donation and to stop payment or dispute if you discover a problem. Take the time to research the charity fully; the charity that needs your money today will welcome it just as much tomorrow.
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About the BBB
The BBB is an unbiased nonprofit organization that sets and upholds high standards for fair and honest business behavior. Businesses that earn BBB Accreditation contractually agree and adhere to the organization’s high standards of ethical business behavior. The BBB provides objective advice, free BBB Business Reviews and BBB Wise Giving ReportsTM on charities and educational information on topics affecting marketplace trust. To further promote trust, your BBB also offers dispute resolution services for consumers and businesses. The first BBB was founded in 1912. Today, 125 BBBs serve communities across the U.S. and Canada. Please visit www.denver.bbb.org for more information.