Americans gave $240 billion in charitable donations in 2002, according to the American Association of Fundraising Council. Individual gifts - from average, every day people – made up 76 percent of the money raised by U.S. charities in 2002. Philanthropy is anything that represents a direct effort to help others without expecting to get something in return.
How philanthropic organizations work
Many organizations directly benefit people that need help (soup kitchens, for example). Conservation nonprofits contribute in ways that do not directly affect us but are still significant (wildlife or forest conservation organizations, for example). The average American household donates approximately two percent of its annual income, and charities say that as government funding decreases and expenses increase, such donations are vital for survival.
How to tell if a philanthropic organization is legitimate
Experts say that a charity should be used 50 to 60 cents of every dollar to conduct the actual charitable work and the remaining money should be used for administrative, marketing and operating expenses. Charities are required to file an annual report on how much of every dollar goes toward charitable work. You can access these reports online through the websites of the National Center for Charitable Statistics and Philanthropic Research, Inc, which list both public charities and private foundations. And it’s always helpful to see what is going on in the world of philanthropy – check out some of the philanthropy journals, such as Philanthropy News Digest.
Solicitation
All charities solicit, whether by phone, email, or direct mail. It has become common practice for charities to swap, share, and sell lists of donors. When you give to a charity, your name may be sold to other nonprofits or even to for-profit companies. However, because of the increased public annoyance with junk mail, many charities are starting to disclose their mailing list policies and usually offer the option for people to remain off their mailing list.
How to make a contribution
You can make a contribution in several different ways. Some charities, such as Salvation Army, accept cash. Or you can make a donation with a check, which is recommended if you wish to claim the donation for tax-deductible purposes. You can designate funds or land to the charity of your choice in your will. Or you can donate products, such as computers, cars (for example, at www.donationline.com or at www.specialkidsfund.org ) or personal time.
What about the Internet?
Charities, like everything else, have gone online in an effort to reach as many people as possible. And as with everything else, scams and frauds exist. In order to avoid being cheated out of your money, you need to: make sure the charity’s name you want matches the one on the website, as many charity names are similar; be 100% confident in the security of the website if making a donation with credit card, because you can never get that information back (you can, however, stop payment on a check!); and be sure to do your homework about the charity before donating.
Tax-deductible?
Gifts to charities located outside of the U.S. are not, in most cases, deductible on U.S. federal income tax forms. The Internal Revenue Service has made up three designations for tax-deductible charity status:
- public charity: receives sizeable part of its income from the public
- private foundation: receives most of its income from investments and endowments and uses that money to give to other groups
- private operating foundation: donates most of its assets to the causes it represents
So no matter the philanthropic organization you choose, remember that your gift does not have to be monetary and can be as simple as volunteering for the Salvation Army during the holidays.
By Virginia Zignego