by Larry Magid
This post is adapted from one that first appeared in the Mercury News in December 2020
“Giving Tuesday,” which is now behind us, is really the start of the end-of-the-year holiday giving period. For the remainder of the month, expect to see even more pitches for end-of-the-year donations from charities you have supported in the past and ones that you may not be so familiar with.
Charitable donations may or may not be tax-deductible depending, in part, on whether you itemize your deductions. You should check with a tax professional and see this link (tinyurl.com/donationdeduction) to an IRS page on “How the CARES Act changes deducting charitable contributions” this year. If you’re old enough to be withdrawing Required Minimum Distributions from your retirement accounts, check with your financial services or tax advisor about how you can have your financial institution deduct donations for you, however, be sure to inquire about a waiver this year per the CARES act. Here’s a link to more about this from the IRS: tinyurl.com/IRSCares.
Sadly, there are those who take advantage of our generosity by tricking people into giving money to scams rather than real charities.
If you get a pitch via email or social media, make sure it’s from a legitimate charity, and be very careful before clicking on any links. Even if it appears to be from a charity you trust, it could be a phishing scam leading you to an imposter site. The safest way to make sure the money is going where it’s intended is to not click on the link but type in the web address of the charity itself.
One exception is Facebook’s Donate button. Facebook has helped raise a great deal of money for nonprofits by allowing people to create their own fundraisers (people often do this on their birthday) to encourage friends to donate. I often make donations to my friend’s fundraisers partially out of respect for my friends but also because Facebook covers all the fees for donations to registered charities, which means that 100 percent of my donation goes to the charity rather than portions going to a fundraiser or a credit card company. Another reason I like to donate this way is because Facebook emails me a receipt. When it’s time to tally up my annual donations, I just search my email for “Facebook fundraiser donation receipt.” Facebook also allows individuals to raise funds for purposes other than charities and does collect fees for those contributions.
When donating on Facebook or any website, be very careful about checking the amount before hitting to send or donate button to make sure you’re donating the amount intended and not a different amount because of a typo. In most cases, you’ll get a receipt by email so check that as well.
Donate only to organizations you know and trust and do some research if you’re not sure. Sites like CharityNavigator.org and GuideStar.org give you information on charities and sometimes have links to the charity’s financial information. All federally tax-exempt nonprofits in the United States are required to file a public tax return called a 990, which, depending on the annual gross receipts of the organization, provides a great deal of information, including the total amounts raised, the organization’s assets, fundraising expenses and other details. You’ll find total revenue and assets in Part I and compensation of board members, trustees, and key employees in Part VII. These forms are reposted on some charity reporting sites and are available directly from the IRS by searching for IRS Tax Exempt Organization Search. In the “search by” field, use the down arrow to select Organization Name. In most cases, the most recent public returns are from two years ago, but you can also look at previous years.
Make sure the donation is going to the right charity. Scammers can use a similar name or cause that you assume to be a legitimate charity.
Don’t be pressured by telemarketers. You may get calls during the holiday season asking for a donation. There is a good chance that a substantial portion of that donation will go to the telemarketing company and a possibility that the call is a scam. If you are told that the money is going to a local agency, such as a hospital, animal shelter or program of a police or fire department, check with the agency before donating and consider donating directly to that agency, which often means they will actually receive all or at least a higher percentage of your donation.
Never donate cash, by wire transfer or gift cards. Legitimate charities will accept credit or debit cards, Facebook payments or payment services like PayPal.
While it’s great to support first responders, be cautious about donating to organizations claiming to raise funds on behalf of police or firefighters. The Federal Trade Commission has a webpage that says “Simply having the words ‘police’ or ‘firefighter’ in an organization’s name doesn’t mean police or firefighters are members of the group, and “Just because an organization claims it has local ties or works with local police or firefighters doesn’t mean contributions will be used locally or for public safety.” I recommend you also check out the legitimacy of organizations claiming to support health care workers or any other group to make sure they truly benefit people in need.
Giving is good
While I urge caution while giving, I strongly support charitable donations and applaud the impulse to be generous to those in need. There are many who need all the help that they can get.