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Charitable Donations: Give or Take?
You may have contributed some of the
$212 billion raised for charities in 2001. Unfortunately,
a portion of that amount may have been misused or ended
up in the pockets of fraudulent solicitors. With more
than 700,000 federally recognized charities soliciting
for charitable contributions, it pays to be cautious
when making a donation.
Your charity dollars are an investment
in your community, the nation and the world. It's wise
to use just as much caution when making your charitable
giving decisions as you do when making other decisions
affecting your overall financial picture.
Paid Fund-Raisers
Some charities find it efficient to pay professional
fund-raisers — to handle large scale mailings,
telephone drives and other solicitations — rather
than use their own staff or volunteers. Professional
fund-raisers are in business to make money and are entitled
to keep a portion of the money they collect. If you're
solicited for a donation, you may want to ask if the
caller is a paid fund-raiser and what percentage of
your donation the fund-raiser will keep. If you're not
comfortable with the amount, you may want to donate
to a different organization, or send your donation directly
to the charity so that they benefit from the full amount
of your check.
Reducing
Telephone and Direct Mail Solicitations
If you feel overwhelmed with direct mail requests for
donations, you can help to reduce the number of those
solicitations. Typically, when you donate to a charity,
your name is placed on the charity's mailing list. The
charity uses this list to re-contact you and often rents
it or exchanges it with other organizations. You can
stop the sharing of your information by including a
note with your donation asking the charity not rent,
sell or exchange your personal information and donation
history. You also can ask a nonprofit organization to
limit its donation requests to once or twice a year.
If the organization fails to honor your requests, you
may wish to find a different charity to support.
The Federal Trade Commission's (FTC)
Telemarketing Sales Rule applies to telemarketers who
make calls across state lines on behalf of charitable
organizations. The Rule restricts calling times to the
hours between 8 a.m. and 9 p.m. The Rule also requires
telemarketers to promptly identify the charitable organization
they represent and disclose that the purpose of the
call is to ask for a contribution. Telemarketers may
not mislead or lie to obtain a contribution. A consumer
who does not want additional telephone calls from a
paid fund-raiser can ask to be placed on the fund-raiser's
"do not call" list. If the fund-raiser calls
again, they may be subject to a fine of up to $11,000.
The federal government has created
the National Do Not Call Registry — the free,
easy way to reduce the telemarketing calls you get at
home. To register, or to get information, visit www.donotcall.gov,
or call 1-888-382-1222 from the phone you want to register.
You will receive fewer telemarketing calls wwithin three
months of registering your number. It will stay in the
registry for five years or until it is disconected or
you take it off the registry. After five years, you
will be able to renew your registration.
Many states have their own regulations
regarding charitable solicitations. Some require paid
fund-raisers to identify themselves as such and to name
the charity for which they are soliciting, even if the
call is in-state. To learn about the law in your state,
check out links to state charity regulators at the National
Association of State Charity Officials Web site —
www.nasconet.org. Legitimate direct mail solicitations
often list the contact information for regulators in
the states they solicit. The Direct Marketing Association's
(DMA) Mail Preference Service lets you opt out of receiving
direct mail marketing from many national companies for
five years. When you register with this service, your
name will be put on a "delete" file and made
available to direct-mail marketers. However, your registration
will not stop mailings from organizations that are not
registered with the DMA's Mail Preference Service. To
register with DMA, send your letter to:
Direct Marketing Association
Mail Preference Service
PO Box 643
Carmel, NY 10512
Or register online at www.the-dma.org/consumers/offmailinglist.html.
Charity Checklist
Consider the following precautions to ensure that your
donation dollars benefit the people and organizations
you want to help. They're good practices whether you're
contacted by an organization's employees, volunteers
or professional fund-raisers, soliciting donations by
phone, mail or in person.
- Be wary of appeals that tug at your heart strings,
especially pleas involving patriotism and current
events. Although the Department of Defense does
not endorse any specific war related charity, you
can visit their Web site at http://www.army.mil/operations/oif/FAQ.html
to find out about military relief societies that provide
assistance to U.S. Servicemembers and their families.
- Ask for written information about the charity,
including name, address and telephone number.
A legitimate charity or fund-raiser will give you
information about the charity's mission, how your
donation will be used and proof that your contribution
is tax deductible.
- Check out the charity's financial information.
For many organizations, this information can be found
online at www.guidestar.org or at GuideStar, 427 Scotland
Street, Williamsburg, VA 23185; 757-229-4631.
- Ask for identification. The Telemarketing
Sales Rule requires for-profit fund-raisers to disclose
the name of the charity requesting the donation. Many
states require paid fund-raisers to identify themselves
as such and to name the charity for which they're
soliciting. If the solicitor refuses to tell you,
hang up and report it to law enforcement officials.
- Call the charity. Find out if the organization
is aware of the solicitation and has authorized the
use of its name. If not, you may be dealing with a
scam artist.
- Check with local recipients. If giving
to local organizations is important to you, make sure
they will benefit from your generosity. If a charity
tells you that your dollars will support a local organization,
such as a fire department, police department or hospital,
call the organization to verify the claim.
- Watch out for similar sounding names. Some
phony charities use names that closely resemble those
of respected, legitimate organizations. If you notice
a small difference from the name of the charity you
intend to deal with, call the organization you know
to check it out.
- Know the difference between "tax exempt"
and "tax deductible." Tax exempt means
the organization doesn't have to pay taxes. Tax deductible
means you can deduct your contribution on your federal
income tax return. Even if an organization is tax
exempt, your contribution may not be tax deductible.
If a tax deduction is important to you, ask for a
receipt showing the amount of your contribution and
stating that it is tax deductible.
Beware of organizations that use meaningless terms
to suggest they are tax exempt charities. For example,
the fact that an organization has a "tax I.D.
number" doesn't mean it is a charity; every nonprofit
and for-profit organization must have a tax I.D. number.
And an invoice that tells you to "keep this receipt
for your records" doesn't mean that your donation
is tax deductible or that the organization is tax
exempt.
- Be skeptical if someone thanks you for a pledge
you don't remember making. If you have any doubts
about whether you've made a pledge or previously contributed,
check your records. Be on the alert for invoices claiming
you've made a pledge. Some unscrupulous solicitors
use this approach to get your money.
- Ask how your donation will be distributed.
How much will go to the program you want to support
(as opposed to other programs of the nonprofit), and
how much will cover the charity's administrative and
telemarketing costs?
- Refuse high pressure appeals. Legitimate
fund-raisers won't push you to give on the spot.
- Be wary of charities offering to send a courier
or overnight delivery service to collect your donation
immediately.
- Consider the costs. When buying merchandise
or tickets for special events, or when receiving "free"
goods in exchange for giving, remember that these
items cost money and generally are paid for out of
your contribution. Although this can be an effective
fund-raising tool, less money may be available for
the charity.
- Be wary of guaranteed sweepstakes winnings
in exchange for a contribution. According to
law, you never have to donate anything to be eligible
to win.
- Avoid cash gifts. Cash can be lost or
stolen. For security and tax record purposes, it's
best to pay by check.
Charity
Check-Up
Many charities use your donations wisely. Others may
spend much of your contribution on administrative expenses
or more fund-raising efforts. Some may misrepresent
their fund-raising intentions or solicit for phony causes.
Before you open your checkbook, check
out the charity you're considering with these organizations:
BBB Wise Giving Alliance
4200 Wilson Boulevard, Suite 800
Arlington, VA 22203
(703) 276-0100
www.give.org
American Institute of Philanthropy
3450 Lake Shore Dr., Suite 2802 E
Chicago, IL 60657
(773) 529-2300
www.charitywatch.org
GuideStar
427 Scotland Street
Williamsburg, VA 23185
(757) 229-4631
www.guidestar.org
Your Local Charity Registration
Office
Most states require charities to be registered or licensed
by the state. Check with your state Attorney General's
office or Secretary of State. You can find a list of
state charity regulators at the National Association
of State Charity Officials Web site — www.nasconet.org.
Many smaller, newer or local charities
may not be rated by the organizations listed here. Some
fraternal organizations, such as police and fire groups
may not be rated at all. If the charity seeking your
donation is not listed or rated, follow the precautions
listed under Charity Checklist to help
you determine whether an organization deserves your
donation dollars.
Where to
Complain
If you believe an organization may not be operating
for charitable purposes, is making misleading solicitations
or is ignoring requests to be placed on a "do not
call" list, contact your state Attorney General,
your local consumer protection office or the Federal
Trade Commission.
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