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Be Smart about Charitable Giving

Americans, as a group, are generous—especially during this wonderful holiday season. But they can also become cynical if they feel they have been duped.  A recent example is the New Jersey couple who raised hundreds of thousands of dollars for a homeless man on GoFundMe.  The feel-good story turned sour when New Jersey prosecutors announced last month that the three conspired this get-rich-quick scheme and agreed to split the profits.

There will always be people who take advantage of the kindness of others.  But you can be smart about how you donate—so that your money reaches those who you truly intend to help.

Do your research.

Let’s say you are approached for a donation in a public place and you are not familiar with the organization or charity.  Ask for a pamphlet or business card that you can take with you.  Don’t feel pressured to donate immediately.  If you receive an unsolicited phone-call from someone claiming to represent a charity, tell them you would like to take down the legal name, phone number, and tax ID of the charity.  Explain that you will consider giving at a later date.  If they hang up on you, that may be a tip-off.  (Many telemarketers claiming to represent police or firefighter organizations are scams.)

Websites such as https://www.charitynavigator.org can help you learn more about national and local charities.  They rate charities based on audited financial reports and tax returns.  You can find out what percentage of donations goes to the programs and services it delivers.  In other words, do you really want to donate to the Kids Wish Network (not to be confused with Make-A-Wish) where 80 cents of every dollar raised is spent on fundraising and salaries and only 20 cents goes to help kids?

Veteran-related charity fraud has gotten so bad that Utah recently issued a warning to citizens about donating to groups claiming to support veterans.  Although many are legitimate, others actually give very little to assist veterans.  And some are just outright fraud.

Let’s assume you want to donate to the Wounded Warrior Project before year end.  This organization assists severely injured military men and women.  Did you know there are over 90 registered charities that include “Wounded Warrior” as part of their name?  Using the website, Charity Navigator, you can sort out the specific charity you are looking for and learn more about their rating.  For example, in 2017, Wounded Warrior Project took in nearly $210 million in donations.  Of each dollar raised, 71 cents went to their programs for veterans, 23 cents went for fundraising, and 6 cents went to administrative costs.  Charity Navigator has given them a ranking of three out of four stars.  The site also shows similar charities who have earned a four-star rating (because more of their income goes toward programs and services.)

Planning in advance can make charitable giving a stress-free and enjoyable experience.  You can turn away solicitors without guilt because you are already giving to causes you value most.