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Donors Beware
It is important to recognize exactly where your
charitable dollars are going. Safeguarding your donation from
deceitful solicitors can be half the battle. By Phil Dyer, CFP
In the wake of every natural and manmade disaster, scam artists set
up phony charities in attempts to dupe well-meaning donors with
fraudulent Web sites, phone solicitations, and direct mail.
Unfortunately, it is often difficult to distinguish between phony
charities and real ones because of the official look of some
deceitful Web sites and mailings.
Even if a charity is legitimate, some only use 15 percent to 20
percent of each dollar raised for their stated charitable purpose.
This means fund-raising, salaries, and other overhead expenses eat
up 80 percent to 85 percent of donated money. Many planned giving
experts recommend supporting charities with overhead costs of 25
percent or less, so that at least 75 percent of your gift is used
for the charitable cause.
Cindy Amos, MOAA’s scholarship and charitable development officer,
suggests asking two questions when approached with a fund-raising
pitch (particularly a telephone solicitation):
- How much of each dollar donated is going to support the
cause?
- Will the charity send me a written copy of its audited
financial statement?
Some charities employ high-pressure phone solicitors for the bulk
of their fund-raising efforts. These pitches can be intimidating,
particularly for older donors. If a solicitor refuses to provide
information or if less than 75 cents of each dollar actually goes to
charitable work, politely — but firmly — decline to donate, and ask
to be put on the organization’s “do not call” list.
The best way to ensure your charitable dollars are used wisely is to
do some homework. Be sure to choose charities you feel comfortable
supporting based on their mission, efficiency, and financial
strength. The following Web sites are excellent places to start your
search
- www.give.org, The Better
Business Bureau “Wise Giving” Alliance;
- www.guidestar.org, a
database of 1.5 million IRS-registered charities; and
-
www.charitynavigator.org, an independent charity evaluator
that tracks the financial strength and efficiency of more than
4,000 charities.
If a charity is not listed by one of these resources but you
still want to donate, ask some questions first. Request the name of
the solicitor, ask for copies of the state or federal charitable
registration, and learn about the specific project(s) the money is
being solicited for. Again, solicitors unable or unwilling to
provide the requested information should be regarded as highly
suspicious and avoided.
As a donor you should always take precautions to ensure the money
you donate is supporting a legitimate cause. Do your homework, ask
tough questions, and don’t be afraid to say no!
Make the Most of Your Donation
- The Katrina Emergency Tax Relief Act allows for charitable
donations up to 100 percent of adjusted gross income for
qualified charities. Donations must be made prior to Dec. 31,
2005.
— Former Army Capt. Phil Dyer, CFP, is deputy director
for financial education, Benefits Information. For financial advice,
members can contact Garrett Planning Network at (866) MOAA-GPN
(662-2476) or
www.garrettplanning.com.
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