How to Know Legitimate Charities for Contributions

How to Know Legitimate Charities for Contributions 01/17/10

Kim: As usual when tragedy strikes such as in Haiti, Americans are quick to reach into their pocket books to give to help the unfortunate. But how do you know if your charitable contribution is going to help the unfortunate? Here to discuss charitable giving is attorney Michael Solomon.

Kim: How do I know if my gift to a charity will be spent how I want it?

Mike: Some charities will solicit funds for a certain purpose and generally reputable charities will use the money they collect for those purposes. However usually there is no legal requirement for the charity to spend the money for the purpose collected. Many people may remember that after 911, the American Red Cross collected more money than they could spend on the victims of 911 and decided to allocate the money for other charitable purposes. That caused a big uproar.

Kim: How do I know the charity is legitimate?

Mike: Unfortunately there is no easy way to tell if a charity is legitimate. However here are some steps you could take:

  • Contact the better business bureau or go to the Bureau's website and look for information on the charity.
  • Also you can check with http://www.guidestar.org/ which has information on the tax filings of the charities which shows how the money is spent
  • IRS Publication 78 lists all charities that are eligible for tax deductible contributions.

Please be careful for scam charities that use similar names to familiar charities. For example the American Cancer Society is the charity most are familiar with. The Cancer Fund of America is a similar sounding charity that according to the Better Business Bureau, 99% of every dollar collected goes to salaries and other fund raising costs and only 1% goes to charity.

Kim: What if you receive a call over the phone asking for a charitable contribution?

Mike: Unless you personally know who the caller is don't give them any financial information over the phone. Ask for information to be sent by mail. You can then go to Ohio Attorney General web site and see if they are a registered charity or some of the other web sites I mentioned earlier to see if the charity is legitimate.

Kim: It almost sounds like you should not give to charity.

Mike: No. It just means that if you are going to give away some of your hard earned money make sure you take a little time to do some research and give to a good organization.