BBB Offers Ten Tips for Giving in Connection with the Newtown Tragedy
December 21, 2012
The shooting at Sandy Hook Elementary School in Newtown, Connecticut will bring out both the good and the bad in people. The BBB’s Wise Giving Alliance, the national charity monitoring arm of the Better Business Bureau, is cautioning donors to be aware of red flags when it comes to raising funds to help the residents of Newtown, and to be aware of the different circumstances that often emerge in tragedy-related philanthropy.
Below are ten tips offered by the BBB Wise Giving Alliance to educate donors so they may give with confidence.
1. Do your research
Take the time to check out the charity to avoid donating to a questionable or poorly managed effort. The first request for a donation may not be the best choice. Be proactive and find charities you can trust.
2. Be familiar with each state’s charity registration requirements
About 40 states require charities to register with a state government agency (usually a division of the State Attorney General’s office) before they are permitted to solicit for charitable gifts. If the charity is not registered, that may be a significant red flag.
3. Respect victims and their families
Organizations raising funds should get permission from the victims’ families to use either the names of the victims and/or any photographs. Some charities raising funds for the Colorado movie theater victims did not do this and were the subject of criticism from victims’ families.
4. Find out how the donations will be used
Watch out for donation requests that don’t identify the intended use of funds. For example, find out exactly how the donation will help the victims’ families.
5. How do you handle donations when a family sets up its own assistance fund?
Some families may decide to set up their own assistance funds. Understand that these funds may not be set up as charities. Also, make sure that collected monies are received and administered by a third party such as a bank, CPA or lawyer. This will help provide oversight and ensure the collected funds are used appropriately (e.g., paying for funeral costs, counseling, and other tragedy-related needs).
6. Advocacy organizations may not be charities
Tragedies that involve violent acts with firearms may also inspire requests from a variety of advocacy organizations that address gun use. Donors can support these efforts but consumers should note that some of these advocacy groups are not tax exempt as charities. Watch out for newly created advocacy groups that may be difficult to verify.
7. Be cautious about online appeals
Never click on links for charities associated with unfamiliar websites, or in response to unsolicited texts or emails. These may take you to a look-alike website where you will be asked to provide personal financial information. Don’t click on links you are unsure of – they may download harmful malware onto your computer. Don’t assume that charity recommendations on Facebook, blogs or other social media have been vetted.
8. Insist on financial transparency
When funds are raised for a tragedy, it is even more important for organizations to provide an accounting of how the funds were spent. Transparent organizations will post this information on their websites so that anyone can find out, and not have to wait until the audited financial statements are available at a future date.
9. Understand newly created versus established organizations
An established charity is more likely to have the ability to quickly address the circumstances and have a track record that can be evaluated. A newly formed organization may be well-meaning but will not have a track record and may not be well managed.
10. Understand which donations are tax deductible
Not all fund-raising organizations are tax exempt as charities under section 501(c)(3) of the Internal Revenue Code. Donors can certainly support these other entities but unless they meet the IRS guidelines, the donation is not deductable for federal income tax purposes. For more information, go to www.irs.gov.