Today's tough economy has been doubly hard on nonprofit organizations that rely on charitable contributions. Many people feeling the pinch have had to cut back on their donations, and because so many are out of work, charities that assist low-income families are being swamped just when their funding has been reduced.
If you're able to make charitable donations, whether cash, material goods, or volunteering your time, make sure the organizations deserve your support.
Here are a few ideas that might help:
Make sure the non-profit organization is well-run. Ideally, it should apply at least 75 percent of contributions to programs that serve beneficiaries, as opposed to salaries, advertising, fund-raising, and other administrative expenses.
Study the organization's website, annual report, and mission statement, and ask for a copy of its IRS Form 990, which details how contributions are spent. Speak to staff members or volunteers, or volunteer there yourself. Or, if you know someone who has used its services, ask for their impressions of the organization's efficiency and client service.
Several online research tools can help:
Take advantage of tax deductions. If you itemize deductions on your federal taxes, you can deduct money and property contributions to qualified tax-exempt organizations, within IRS guidelines. And, although your time spent volunteering isn't tax-deductible, associated mileage and other expenses may be. The IRS' Tax Information for Contributors website (www.irs.gov/charities/contributors) features a search engine for eligible organizations, information on reporting and substantiating charitable deductions, and other helpful tips.
Guard against fraud. Unfortunately, some unscrupulous people and organizations will take advantage of your desire to help others – if you let them. A few tips:
A few additional tips:
This article is intended to provide general information and should not be considered legal, tax, or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.