Charitable Donations: What You Need to Know and What You Should Consider

It is the holiday season, and charitable donations are on a lot of people’s minds. Whether you have a cause close to your heart that you have given to for years, or are searching for a new charity, here are a few things you should consider before you make that donation:

Spot the Scam

Everyone knows about the Nigerian prince email, but can you spot the fake charity hidden behind a heart wrenching story? Scammers take advantage of the generosity that the holiday season brings and they step up their efforts this time of year with aggressive phone calls, emails, and even door knocks. Aside from giving to the sidewalk Santa outside your local shopping center ringing the bell for a well-known organization, charitable donations should be thoughtfully considered and not be made at the spur of the moment. Diligently avoid those pressuring you for immediate donations or for payments made in cash or via wire transfer. Additionally, be cautious of donating on crowdfunding websites where there is little to no vetting of campaign organizers or the fundraising stories they post. Take some time to consider the charity or cause in which you plan to give, and make your donation only after fully researching the organization receiving your gift.

Do Your Research

If you are solicited online, over the telephone, or someone shows up at your door seeking a charitable donation, don’t turn over your credit card information so quickly. Instead, ask for the specific name of the charity so you can check it out yourself. Visit the organization’s website, review their documentation, mission statement, and member information, and call the listed number directly to ensure you were speaking to representatives from the actual charity or non-profit. (Note: Since tenacious scammers can easily publish a fake website that can quickly get listed in internet search engines, it is a good idea to also research the charity with one or all of the resources I have included at the end of this article).

Beware of High Overhead

How much of your charitable donation actually makes it to the cause? You know that it takes money to run a charitable organization, but how much overhead is acceptable to you? This should at least be a question you ask, given the outrage at several charities over the last few years with overhead of up to 90%. While there is an active campaign to end the use of overhead ratio to judge the performance of a charity, you should still seek to determine this information and decide for yourself whether you are comfortable with the numbers.

Understand the Mission

Is the charity clear about what they are raising funds for and exactly how the money is being spent? The organization you are considering could be for children and, as any parent can tell you, from clothes, food, toys, immunizations, education, and extracurricular activities, there are literally a thousand ways to help children in need. Consider another scenario: Are you planning to make a donation to fight cancer? Depending on the organization, that could mean anything from helping families affected by the disease to the funding of stem cell research. Make sure that you know how the organization operates so that you are not potentially misled by a message (whether intentional or not) or disappointed after making your charitable donation.

Ask for Details

Find out as much as you can before donating to avoid any confusion. If you believe you are helping to make wigs for children with cancer, are you going to be happy your donated hair was sold? This happened to Locks of Love with a very public allegation that $6 million worth of hair donations went missing. Get details on fund allocations, locations served, and timeframe for disbursement. Also, if you will be looking to deduct your charitable donation from your taxes, be sure to confirm that the organization is eligible to receive tax-deductible contributions (see the IRS link below) and obtain a written record of your gift.

Charitable giving is an admirable endeavor and one that I in no way want to discourage. I believe that it is important to give back and help those in need, and a charitable donation, be it time, money, or something else, is a great way to accomplish that goal. I want to encourage everyone to take a few moments to vet your charity before donating. With a few inquiries you can ensure that your money is doing what you intended and truly helping those in need. Happy giving!

Do you have any additional tips you would like to share about charitable donations? Let me know in the comments below.

Here is a list of resources to help you learn more about your charitable organization:

 Better Business Bureau Wise Giving Alliance
 IRS List of Tax Exempt Charities
 Charity Navigator
 Federal Trade Commission

Featured Image Courtesy of winnond at