This “season of giving,” means that many of us will be giving time and money to help charities, schools and churches. BBB's charity reports and tips can help you make certain that your contributions go to charities that will make good use of your money to help the causes that you support.
You – as well as the causes you support and the good organizations that work to serve that cause – cannot afford to have your valuable contribution “siphoned off” by a charity that may spend 90% or more of your money on fundraising or administrative costs.
Charities need our support more than ever because many organizations are experiencing high demand for services and cutbacks of government funds. At the same time, high unemployment and a tough business environment have squeezed the ability of many donors to help.
More than 80% of the money raised by charities in this country comes from individuals. To help these generous donors make wise giving decisions, the BBB Wise Giving Alliance offers the following tips on charitable giving:
- Do not give cash; always make contributions by check and make your check payable to the charity, not to the individual collecting the donation.
- Keep records of your donations (receipts, canceled checks, and bank statements) so you can document your charitable giving at tax time. Although the value of your time as a volunteer is not deductible, out-of-pocket expenses (including transportation costs) directly related to your volunteer service to a charity are deductible.
- Don't be fooled by names that look impressive or that closely resemble the name of a well-known organization.
- Check out the organization with the local charity registration office (usually a division of the state attorney general's office) and with your BBB.
- Mail appeals should clearly identify the charity and describe its programs in clear and specific language. Beware of appeals that bring tears to your eyes but tell you nothing of the charity or what it's doing about the problem it describes so well.
- Appeals should not be disguised as bills or invoices. It is illegal to mail a bill, invoice, or statement of account due that is in fact an appeal for funds, unless it bears a clear and noticeable disclaimer stating that it is an appeal and that you are under no obligation to pay unless you accept the offer.
- Deceptive invoices are most often aimed at business firms rather than individuals. Contact your BBB for detailed guidelines on how to handle appeals disguised as bills or invoices.
- It is against the law to demand payment for unordered merchandise. If unordered items such as key rings, stamps, greeting cards, or pens are enclosed with an appeal letter, remember you are under no obligation to pay for or return the merchandise. If payment is requested, inform your BBB. In our experience, unordered merchandise can mean high fundraising costs.
- Appeals that include sweepstakes promotions should disclose that you do not have to contribute to be eligible for the prizes offered. To require a contribution would make the sweepstakes a lottery through the mail, and it is illegal to operate a lottery through the mail.
- Matching check appeals are not subject to any particular legal requirements. Donors should keep in mind, however, that they do not have to return the checks if they don't contribute. The checks do not have any real value in and of themselves.
Telephone, Door-to-Door, And Street Solicitations
When you are approached for a contribution of either your time or your money, ask questions, and don't give a donation until you're satisfied with the answers. Charities with nothing to hide will encourage your interest. Be wary of their reluctance or inability to answer questions.
Call your BBB if a fund raiser uses pressure tactics such as intimidation, threats, or repeated and harassing calls or visits. Such tactics violate BBB’s Standards for Charity Accountability.
- Ask for the charity's full name and address. Demand identification from the solicitor.
- Ask if your contribution is tax deductible. Contributions to tax exempt organizations are not always tax deductible. (See the next section of this brochure for an explanation of the terms "tax deductible" and "tax exempt".)
- Ask if the charity is licensed by state and local authorities. Registration or licensing is required by most states and many communities. However, bear in mind that registration in and of itself does not imply that the state or local government endorses the charity.
- Don't succumb to pressure to give money on the spot or allow a "runner" to pick up a contribution; the charity that needs your money today will welcome it just as much tomorrow.
- Watch out for statements such as "all proceeds will go to the charity." This can mean that the money left after expenses, such as the cost of written materials and fund raising efforts, will go to the charity. These expenses can make a big difference, so check carefully.
- When you're asked to buy candy, magazines, card, or tickets to a dinner or show to benefit a charity, be sure to ask what the charity's share will be. You cannot deduct the full amount paid for any such items, as the IRS considers only the part above the fair-market value of the item to be a charitable contribution. For example, if you pay $10 for a box of candy that normally sells for $8, only $2 can be claimed as a charitable donation.