It’s the holiday season, when generosity and goodwill toward others—reinforced by the gifting traditions of Christmas, Kwanzaa and Hanukkah—is the order of the day. This is an especially important time for charitable causes of all kinds, as donors like you and me are more likely to respond to fund-raising appeals than at any other time of the year.
Our instinct toward giving is a healthy one, not just spiritually, but financially as well. One of the common traits of successful wealth accumulators is their consistent habit of channeling a portion of their wealth in support of the institutions and charitable causes they believe in. They understand that investing their resources in community-sustaining institutions, programs and causes creates a healthier and more fertile environment for their own wealth-building efforts. This is the rationale behind the Biblical principle of tithing to your church.
Unfortunately, peak season for legitimate charities (Christmas time, and after major disasters such as Hurricane Katrina or the 9-11 attacks) also happens to be prime time for fund-raising scams, bogus charities and con artists intent on exploiting your giving nature to separate you from your money. If you are serious about building and preserving your wealth, the key to not being taken advantage of is not to be less generous, but to be more thoughtful, deliberate and strategic with your charitable donations. Here are some tips to help you accomplish this objective.
1. Treat your charitable donations as you would any investment. If you invest in a mutual fund, you expect a specific return on that investment. In the same way, when you make a donation to a charity, you want to be sure that your dollars will be used to achieve the result—whether it is fighting the spread of AIDS in the black community or providing relief to natural disaster victims—that you intended it to. You wouldn’t put money into a mutual fund without reading a prospectus and learning about the fund’s past performance and investment philosophy. And you shouldn’t give money to any charity that you are not familiar with and have not investigated for yourself. Make sure you get the actual name, address, and phone number of the charity before giving. Then check it out by going to the IRS website at www.irs.gov, which has an updated list of legitimate charities and non-profit groups, or by calling the IRS toll-free at 877-829-5500. Another useful website is www.give.org, part of the Better Business Bureau’s Wise Giving Alliance. Also check out two great web sites that review and grade individual charities, www.Charitywatch.org and www.CharityNavigator.org.
2. Don’t give on impulse. Many fund-raisers, even legitimate ones, will try to manipulate your emotions (gratitude, guilt and even shame) to get you to give, even it you’re not sure you want to—and before you have a chance to check out the charity for yourself. Don’t fall for it. Only give when you are familiar with the charity and you truly believe in or are passionate about the cause it serves. After all,