Studies show that people who itemize their taxes are more likely to generously give to non-profit organizations. Maintaining receipts for the monetary donations for your 2014 taxes can put more money back in your pocket.
What is acceptable for receiving the tax credit on your federal taxes when it comes to a monetary donation?
1. The organization must be a 501 (c)(3) as recognized by the IRS. They must apply to the federal government for this nonprofit status. Groups who are exempt from federal income tax can include charities and private foundations that exist for reasons including charitable, religious, educational, scientific, literary, testing for public safety, fostering amateur sports competition, and prevention of cruelty to children or animals.
2. In claiming your donation to an organization, you cannot receive something in return. That firehouse chicken barbecue, a car wash, a raffle (due to the offer of a prize), or another service like filling your pool with water do not qualify as an eligible donation. The gift must be a true donation for which you only receive a warm heart.
3. If you volunteer for the organization, the group appreciates your time and skills. However, you cannot place a monetary value on your time and service to the nonprofit.
For more information on what are acceptable donations go to the IRS web site for Publication 526.
Recently a postcard was received in the mail from a non-profit who collects clothing to give to veterans. Sounding like a good charitable cause, their organizational name was unfamiliar. Having been a librarian, I checked on several web sites for the validity of this organization, including their own site.
Knowing that many groups tend to flock to certain types of organizations (pulling at your heartstrings to get you to donate to their cause), researching their validity as a nonprofit led to the discovery that they have had some issues that needed further consideration. The compensation of the top officials showed large annual salaries. This group also donated money to the Washington Redskins several years ago and in return received sky box seats. So why would a not for profit organization looking to help veterans give money to a professional football team? Does that sound right to you?
If you want to know how your money is being used, there are three good sites to check out
charitynavigator.com givewell.org bbb.org
These three sites have their own way to rate or review charities. But not every charity will appear on these sites. Some charities may be new (these web sites may be updated on an annual basis), and have only a local appeal, not being in the national scope.
Next, look for the organization's web site - what information do they provide there that can help you make that decision on whether to give or not. As a potential donor, you have the right to know why the organization exists and what they do with the financial donations they received.
When reviewing them, seek information on how much of your donation goes directly to the cause (program), to overhead including salaries (administration), and promotion of their cause (fundraising). You have the right to view their Federal Form 990, which will explain their assets, receipts, expenditures and compensation of officers.
Never feel pressured to give to someone who is asking for money. You have the right to ask to be removed for their phone and mailing lists if so inclined. If you are speaking to a someone in person or on the telephone, ask for the group's information to review it when considering a contribution.
Years ago, a friend told me they had received a telephone call asking for a donation to a local fire company. They wanted to support their fire company, but when they asked the caller to name two of the fire fighters, the caller could not. This call was made from an company hired to solicit funds from the residents. In this case, the fundraising company would be keeping a portion of the money. Some organizations may hire someone to solicit for them, but this could also be a scam. To see the funds used in the best possible way, with the money going to the organization and not the fundraiser/scammer, send the check directly to the organization or deliver it directly to their location.
With your mailbox full of requests, and receiving telephone calls from other groups, you need to decide in the end to which organization deserves your money. After all, the charity's ability to bring about long lasting and meaningful change in the lives of people and communities should be the key reason for your financial investment.
