Donating To Charity Is Just Awesome
Donating to charity is–or should be–a year-round occupation. But during the holiday season, an abundance of pleas arrive in the mail or by telephone. Often, they’re from charities that you’ve never heard of. Still, you may be tempted to send $10 or so.
That’s fine if the charities are worthwhile. But some aren’t. How can you tell? The letters sound sincere.
The medical research seems okay. But, the real “charity” you’re supporting might be the people who mailed the letter.
Most givers know they should ask the charity the following question: What percentage of each dollar you spend goes for good works? The answer should be 60 percent or more, with the balance going to fund-raising and administration. But, a charity can use those figures to mislead you.
For example, say the group claims to spend 80 percent of each dollar on its program, which includes “public education.” The find-raising letter provides some commonplace tips: for instance, “how to check yourself for breast cancer,” or “five ways to prevent home fires.” Guess what? That’s “public education.” The charity might be spending most of your money to mail more “educational” letters to people like you.
Three nonprofit organizations have set voluntary “good guy” standards for charities, and publish lists of which ones pass or fail. Each list includes some groups the others don’t, so careful given make sure they get all of them. You’ll be astonished at some of the familiar names that aren’t up to snuff or that refuse to disclose financial information. The watchdogs:
1. The National Charities Information Bureau (19 Union Square West, New York, NY 10003; 212-929-6300; http://www.give.org). Its “Wise Giving Guide” rates 355 charities and is free by mail or on the Web. An in-depth report on a single charity is also free; additional reports cost $.3.50 each. The fall guide identifies 19 groups that are spending too much on fund-raising, most of which are devoting too little to their missions.
2. The American Institute of Philanthropy (4905 Del Ray Ave., Suite 300, Bethesda, MD 20814; 301-913-5200). The “Charity Rating Guide & Watchdog Report” gives more than 350 organizations grades from A+ to F, based on their financials. Currently, it is handing out 38 F’s. Special price for Good Housekeeping readers: $3 per single copy.
3. The Philanthropic Advisory Service of the Council of Better Business Bureaus (4200 Wilson Blvd., Suite 800, Arlington, VA 22203; 703-276-0100). Its “Give, But Give Wisely” evaluates about 200 charities that generate the most inquiries from the public. Thirteen of them have failed to meet one or more fund-raising standards. This guide is free through the end of December if you send a self-addressed, stamped, business-size envelope.
The IRS smiles on generous given. You can write off your contributions to qualified organizations if you file an itemized tax return. There are limits on huge contributions, but here’s what’s generally deductible:
Cash contributions. For gifts of less than $250, you need a canceled check or thank-you letter from the organization, in case you’re audited. For gifts of $250 or more, you must have that letter.
Charity functions. If you buy a ticket to a theater benefit or church supper, you can tax-deduct only the portion of the price that exceeds the cost of your entertainment. The organization will tell you how much that is.
The cost of volunteering. You can write off the cost of using your car on the group’s behalf, at a rate of 14 cents a mile; any uniforms you buy (say, to work as a nurse’s aide); out-of-pocket expenses (such as food you bought for the Girl Scout troop); and travel expenses to the charity’s annual convention (as long as you’re “on duty” and not also taking a personal vacation). Keep receipts and travel records.
You cannot deduct the value of the time you give to the charity or the money you pay a baby-sitter while doing the charity’s work.
Gifts in kind. Deduct used clothing and household goods at their Fair-market value (think flea-market value). For gifts worth less than $250, you need a receipt from the charity describing what you gave and good records of your own. Gifts worth $250 to $500 require a more detailed written acknowledgement from the charity. Gifts over $500 require even more detailed accounting. (For further information, check the IRS’s “Charitable Contributions” publication at http://www.irs.ustreas.gov, or request a copy by calling 800-829-3676.)