In this season of giving, charity toward others is in abundance. People are giving out of the generosity of their hearts and also for end-of-year tax purposes. Regardless of why you are giving to a charity, it is important to find out if the organization is legitimate or not. There are specific things to look for when making your decision for giving.
Tax Exempt Status
There are public charities that have tax-exempt status and others you may want to give to but that don’t have their full credentials yet. A tax-exempt organization will have an IRS form 990. You can request this form, although you may be charged a small fee in order to get it. This form is the Return of Organization Exempt From Income Tax. By law, it must be made available to those individuals who request it. You can also ask to see the organization’s annual report. This document, often in brochure form, highlights not only the financial side of the organization but usually includes highlights of its programs, staff and community impact.
The situation is different with private charities, churches, and related organizations. These may also be tax-exempt entities; however, because they are private, they do not have to let you know about their tax filings, even when you make a request. They are not required by the IRS to fill out a 990 form. You will need to research private charities in order to determine their legitimacy.
Some new startup programs and organizations may have applied for their tax exempt status but not yet received it. If it is a legitimate organization and you wish to donate, your donation will be tax deductible after the organization receives its tax-exempt status. If it does not meet the qualifications, your donation will not be tax deductible.
Check the Charity Watchdogs
There are databases that keep track of charitable organizations and information related to their governance and financial information. GuideStar is one of the popular databases used by people checking on the status of an organization. GuideStar has information about public and private charity organizations. Many private tax-exempt organizations register with GuideStar in order to let people know of their legitimacy.
Charity Navigator is another popular and helpful organization. Thousands of charities are rated here and millions of people depend on this organization to determine the status of the charity to which they wish to donate. Larger organizations are listed along with their history and financial effectiveness.
This time of year, people are very generous, and there are scammers waiting to take your money if you let them. Be sure to do your homework and research any organizations under your consideration for donations. The attorneys at Frohlich, Gordon, & Beason, P.A. encourage you to give and do it wisely.
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