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4 Questions Before You Donate Money to a Charity Organization

find a charityIt’s an age-old question: if you had a million dollars, how would you spend it? A new reality show is answering just that. Secret Millionaire, starting Mar. 6 on ABC, takes real-life millionaires and has them live disguised in poverty-stricken areas. At the end of their stint, they reveal themselves and donate loads of money to the people they’ve befriended.

Yes, you’ll need a box of tissues to watch it. And yes, you’ll probably be inspired to help out the less fortunate with your own money. But before you sign that check, you need to do a little bit of investigating. That’s why we compiled this list of 4 questions to ask before donating money to the charity of your choice:

1. Is the charity reputable? In other words, if you donate money to a charity that says you’re sponsoring a little girl in Guatemala, how can you make sure that the money is actually going to the little girl? It would be nice if you could trust that every charitable organization is on the up-and-up, but just like every thing in life, there are a few bad apples that spoil the bunch. To make sure your designated charity is the real deal, go to CharityNavigator.org. You can search this website based on the charity name or keyword (so if you want to support a charity to help the homeless all you have to do is type in the keyword “homeless”) and you’ll get information on each charity, including an overall rating, an income statement, mission, accountability, and historical data. Along with this, you will be able to easily see which charities allow for your donation to be tax deductible.

2. Where is my money going? If you want to donate $100 to be used toward breast cancer research, you may think your money is going directly to labs and scientists searching for a cure, but that’s not always the case. The money might actually go to administrative costs in the organization or publicity and marketing. These aren’t necessarily any less important ways for your money to be used (it’s great to get to help get out the message that women should get mammograms for early detection), but you want to make sure your money is being used in the way that you want it to be. In some cases, when you make a donation you can designate exactly what you want it to be used for. My family decided to donate money to a summer camp for homeless children. We talked to the director and realized they needed a new bus with seat belts to transport the kids to and from the city. The used bus they had found was $2000, so we donated $2000 and designated in a letter with the donation that we wanted them to buy the bus with the money. That way, we knew exactly what our money was being used for and that we were helping the organization in the exact way they needed it. It was a donation we could feel good about.

You also want to make sure that your money will be effective in the organization. If you have only a small amount to donate, look for a charity that has a very small operating budget, where $100 will make a huge difference to the good work they can do.

3. Is your contribution tax deductible? Generally speaking, donations made to a 501(c)(3) are tax deductible. These organizations include private foundations and public charities. While many organizations fit into this classification this is not the case with all of them.

4. What about a contribution to a 501(c)(4) organization? These are not typically deductible because they are not seen as charitable contributions by the IRS. That being said, if you donate money to one of these organizations you may be able to use it as a business expense. The best thing to do is contact the charity you are interested in and ask them if donations are tax deductible.

Supporting a charity that you believe in can help make the world a better place and will make you feel good about yourself. Just make sure you know where your money is going, and of course, whether or not you can deduct the contributions.

If you need help finding a charity to support you can use CharityNavigator.org. Along with this, never be afraid to call a particular organization for more information. They are all looking for donations, and are more than willing to answer any questions you may have.

(photo credit: zieak)


{ 8 comments… read them below or add one }

Cliff March 11, 2011 at 10:49 am

A note about designating what money will be used for:

Designating the destination or use of a donation requires the charity to carry the money with an “earmark” to ensure that they follow your instructions. This means they have to document how every penny was spent and keep a record of it. Unless you are donating a large sum of money, obeying your earmark could actually cost them more than your donation is worth.

The bus case the author gives is a good example of earmarking a donation to see that it is used as intended. Otherwise, the money may have been used for something else and the bus never purchased. But if you’re donating $100 (or even $1000) to the Red Cross, leave off the earmark. Most charitable organizations know where the money is needed, and they need the freedom to allocate funds without documenting where an individual donation went. And keep in mind that charities have to spend a little money to get things done, so they have to use some donations to keep the lights on.

Also, choose organizations that promote equality. Choose the Red Cross over The Salvation Army (which is not a charity, but a church), for instance. When helping others, we need to come together, not discriminate. Find out what your charity’s policies are and show support for organizations that accept anyone’s help and help everyone regardless of race, sex, creed, or personal choices.

Alex Reissig March 24, 2011 at 10:18 pm

Great article! However, I must disagree in part with Cliff’s comments. Personally, I would much rather donate to the Salvation Army than the Red Cross, because the red Cross is wastefull with there money. While I am not Catholic, I have no problem with the fact that the organization is part of the Catholic Church.

Everyone has their own set of beliefs and standards in what they want from a charity. My favorite charity (and I donate both money and time to them) is Habitat for Humanity. Why? They are in the business of helping people who want to help themselves. The people who get the habitat homes have to put a ton of work in on these homes.

Perhaps I sound cold, but my first choice is to see my donation go toward helping a hard working individual who is trying to better himself/herself and family.

Anyway, great article! Stop by my blog sometime at http://thethriftynation.com/,

Jason March 27, 2011 at 6:48 pm

A lot of these organizations skim off about 50% of the profits. Have to watch out for those and invest in good charities.

SERGE June 1, 2011 at 4:25 pm

Thank you for this great blog information!I’m finding this whole blogging world a great resource for any topic, and really inspirational.

Ross @ Go Be Rich June 7, 2011 at 9:45 pm

Donating to charities makes me nervous, due to the fact that I’ll never know exactly how my money is being used. Even being shown documentation doesn’t mean that’s exactly how the money was used. Maybe I’m just paranoid. I would much rather try and find someone who is really, really in need and teach them how to make their situation better, and only provide financial help when it’s practically required to for them to help themselves and better their situations.

Maggie@SquarePennies November 28, 2011 at 1:35 am

You can also volunteer at a charity to help them, and while there you might see what they need. Then you can buy that item for them and know where your money went!

Angels with Faith Ministries 501c3 charity July 7, 2012 at 9:51 pm

Angels with Faith Ministries 501c3 non-profit charity located in Winder,GA 30680 announces that our annual Christmas Angels Program will kickoff on November 1st to provide Christmas gifts,holiday food baskets & warm clothing to children in need &their families all over Georgia.You can adopt a family for Christmas & either meet & work with them personally or through us,either way it is tax deductible for every cent that you spend.You can also donate toys(new & lightly used),warm clothing,shoes,coats,baby needs,Food for holiday baskets,Bikes,gift cards,electronics,working computers of all kinds,or make monetary donations via paypal on our websites or by mail or in person.We have volunteers available to pickup donations in georgia. Each year we receive 100s of families in dire need of Christmas assistance from DFCS,Toys for Tots,Salvation Army,Operation Christmas Child,The miltary,Empty stocking,etc ,schools,Churches,businesses,caring neighbors & some who come to us themselves,once the bigger charities either stop taking applications in october or get full they start sending families to us.Since we receive no funding at all & rely strictly on the tax deductible donations of angels we truelly need your help this year. We do not turn anyone in true need who lives in Georgia & isn’t receiving Christmas help from anywhere else(we do check) away because every child deserves to have a wonderful Christmas,food & warm clothing.We are a small group of volunteers working hard to make a difference in the lives of families in true need,crisis or after disasters & since we do not have any overhead costs & our volunteers do all of our promotional,website & other work we can give 100% of ALL donations directly to helping those in need.ALL donations are tax deductible our federal EIN number is 27-1972461.Our websites built & run by volunteers are angelswithfaithministries.beep.com & angelswithfaithministries.org Please be a Christmas Angel this year & adopt or sponsor a family or families in need in Georgia for Christmas or make a tax deductible donation to help us provdie Christmas to 100s of Georgia children email angelswithfaithministriesgeorgia@yahoo.com Phone Lori (director) 678-754-1541 Rev Michael Tuck 678-754-2337 or volunteer Avis at 678-887-1988 since we are also a Church all donations are 100% tax deductible & 100% of ALL donations go directly to helping those in true need

Angels with Faith Ministries 501c3 charity July 18, 2013 at 6:13 pm

Angels with Faith Ministries has moved to our new permanent location at 198 Dogwood Lane Cleveland GA 30528 We have already begun to pickup Christmas donations as we do every year in July gearing up for a very busy Christmas season.We help children in all of Georgia& never turn a child in true need away,our goal is to make sure that NO child in Ga will ever go without something under the tree on Christmas morning,warm clothing & food.We have volunteers to pickup donated toys(new & LIGHTLY used),warm clothing,coats&shoes,baby needs,gifts for teens,electronics,computers of any kind in working condition(kids need them for school & they make an excellent gift for teens),nonperishable food items,wrapping supplies,etc.Our Christmas Angels Program begins each year on November1st but you can sign up at any time to be a Christmas Angel & then hoose your families from our Christmas needs list as families are added beginning on Nov 1st,list is updated several times daily families are added as they come in & removed as they are adopted or sponsored.You can actually choose which families you want to help from the list which includes 1st names,city,each childs name,age,sizes&actual santa wishlist & meet & work with that or those families personally or sponsor them through us& every cent that you spend is tax deductible including gas & mileage for charity.Last year were blessed to help 1083 children&this year we expect many more we are hoping that we have plent of Christmas Angels to help us make sure that they all have a wonderful Christmas.We receive 0 funding & rely only on the tax deductible donations of angels so that we can provide Christmas gifts,warm clothing & holiday food baskets to every child on our needs list,these children live in poverty all year long & truelly deserve a day of joy& happiness & the miracle of Christmas.We all have the power to make a difference & through our unique program you can actually the difference that you are making.100% of EVERY donation through paypal,check,money order,gift card etc from July to December goes toward this program.We hope to have you as a Christmas Angel this year visit our website at http://angelswithfaithministries.beep.com we are a certified & registered 501c3 truelly nonprofit(we pay all costs out of pockt&are a home based charity so that 100% of every donation goes to helping those in true need) charity..Donations can also be dropped off here on the front covered porch at anytime all year long.We help families every day of the year & pickup anything in good usable condition,even truckloads

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