How not to be hurt when you give to the hurting
News headlines recently have chronicled one disaster after another, both natural and man-made. The images coming in from Texas, Florida, Puerto Rico and Las Vegas are heartrending. Locally, many are still reeling from the Gatlinburg fires. So many stories of human tragedy and need move many to reach for their wallets in an effort to ease the suffering.
If you’re one of those generous Americans, God bless you. But before you give, there are a few things to keep in mind. First, you want to make sure you don’t fall prey to a con artist or scam. Next, you need to know how to give wisely, to make sure your money is used well, and for the purpose it was intended. And finally, how do you record your donation so that if you itemize your giving, you can also reduce your taxes?
Looking at the last question first, most Americans who give to disaster relief are not primarily motivated by the thought of a tax deduction based on their giving. But at the same time, you want to be efficient with your resources, so you can give that much more. So here are the facts:
• Not all charitable-sounding organizations are qualified charities in the eyes of the IRS. (Keep reading for how to check them out).
• Even when giving through a qualified charitable organization, you cannot give to a specific individual or family. You can give to a designated area or project, i.e., Puerto Rico disaster relief.
• Crowdfunding is considered a personal gift and as such, not tax deductible.
• All your giving needs to be properly documented to be deductible.To check out an organization, there are two ways you’ll want to research them. You’ll need the exact legal name of the organization, and/or the city in which they’re headquartered to make your search easier.
At IRS.gov, you’ll look for the “Search for Charities” menu selection on the left-hand side of your screen. Then follow the prompts to enter the charity’s legal name and headquarter city to see if they are a recognized charity, a 501(c)3. If an organization tells you they have applied for certification, it doesn’t count for you to be able to take a tax deduction on your donation.
Next, go to GuideStar.org. Here, you’ll need to register, but it’s free to do so. Then search for your proposed charitable organization. You’ll be able to see their Form 990 that they file with the IRS. This outlines exactly where their money goes, so you can see how much goes for overhead, and how much actually goes to the project you intended. Of course, every organization is going to need to pay their staff as well as the rent and the light bill, but a strong percentage should go toward the actual program you want to support. Seeing their 990s will enable you to compare one charity with another, so you can knowledgably choose where your money might make the most impact.
Now having done your due diligence, you can give wisely and confidently. And of course if you have any questions about your giving options, feel free to call our office. We’ll be happy to help.