As the holiday season approaches, many Americans are considering which charities they might support this year. With limited resources, it’s important that we all make good decisions with our charitable funds. Before giving to a charity, consider taking a few easy steps to ensure that your gift will be put to good use:
- Make sure that the charity you’re investigating is a 501(c)3 organization. You can verify this by simply calling the charity. If they aren’t a 501(c)3, your gift will not be tax deductible.
- In Michigan, all charities must be registered with the State. Ask for their registration number to verify that they are legitimate.
- Visit the charity’s website. Look for the most recent annual report and investigate the organization’s finances. Also look into their mission and how they use the funds they’re entrusted with.
- While at the web site, search for a list of the Board of Directors. Perhaps you recognize a name or two. Look for independent leadership and guidance. If all the Board members are related to the executive director, you might want to look elsewhere (trust me, this happens…I’ve seen it).
- Next, go Charity Navigator’s or Guidestar’s website (or a similar charity watchdog) and see how the charity is rated by an independent third party.
- Consider volunteering at the charity before you make a financial gift. This allows you to give the charity the “eyeball test” and to make sure that they are effectively meeting their mission. It also lets you develop a deeper relationship with the staff and other volunteers and you may learn something that you didn’t know.
Once you decide to give, consider your range of options. You could write a check, make a multiyear pledge, gift stock (which carries additional tax benefits to the donor), or give collectibles or other items of value that can be converted to cash. I’ve seen donors give used cars, antique canoes, art collections and more to charities. These types of gifts have special rules, but they also open up additional options for giving.
Whatever you do, give something to someone. Help make the world a better place.