Researching charities to avoid fraud and help others
Summer months are often the time of an increase in natural disasters, and hurricane season comes right after. You want to help those in need, but you want to make sure the organizations involved are not scams. While fewer itemize deductions, those who do want to ensure their deductions are legitimate. Here are some tips on how to research these charities before donating funds.
How to research your preferred charities
1. Charitable organization efficiency. For every dollar you donate, only a percentage of it is actually used to fund programs. Much of your money is used for fundraising and administrative costs. So, how do you know which charitable organization uses your contribution most effectively? Here are three websites that can help you assess potential charities.
2. Avoid fraudulent solicitations. It is often best to avoid donating over the phone or via email solicitations. These are two common ways thieves target their victims. Instead of reacting to a phone call or email, a better idea is to proactively plan who you wish to give money to each year. Another benefit of this approach is avoiding the fees paid to these middleman fundraisers from your donations.
3. Confirm the deductibility. Many smaller organizations will represent themselves as qualified charitable organizations but have not kept their non-profit status up-to-date. If you are unsure whether your desired charity has kept its records up-to-date, you can check the IRS website for a full list of qualified organizations. Here is the link:
4. Get a receipt. Remember, cash donations of $250 or more require a written confirmation from the charitable organization of your donation in addition to your canceled check or bank receipt. If you are unsure whether a confirmation will be forthcoming, limit your deduction to some amount under this $250 threshold.
If you have any questions, contact our RRBB advisors today.
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