It’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)