‘Tis Better to Give, But Don’t Get Taken

Peak season for legitimate charities is also prime time for fund-raising scams.

you can’t give to every worthy cause. If what you truly care about is tithing at your church and fighting breast cancer, don’t be shamed into writing a check to save the environment. Just because it is a worthy cause, does not mean it’s your worthy cause. You have a right to choose which charities get your money without feeling guilty about saying yes to some and no to others.

3. Watch out for charity scams. You will avoid the vast majority of fraudulent and/or unethical fundraising efforts simply by following Steps 1 and 2. Also look out for tricks such as fake charities with names (say, the National Cancer Society, or the American Cancer Association) very similar to well known, legitimate causes (the American Cancer Society). If you do get taken in by a charity scam, contact the Federal Trade Commission toll-free at (877) FTC-HELP. Also report the fake charity to the state attorney general where you live and/or where the charity is located.

4. Avoid giving cash. I believe in only giving by check or credit card. That way, I have a record of my gift, which will be needed if I want to claim the charitable gift as a deduction on my taxes, and especially if I need proof that I’ve been ripped off. Also, I am less likely to give on emotional impulse. Having to take the time to write a check or pull out my credit card will slow me down enough to think about my decision to give before I actually release my dollars. Even after I give, if I have second thoughts, I still have a little time to call my bank or credit card holder to stop the payment. With cash, once it’s gone, it’s gone.

5. Speaking of taxes, make sure you understand the difference between tax-exempt and tax deductible. When organizations, including many charities, gain tax-exempt status, it means the IRS does not require it to pay taxes on the donations it receives. On the other hand, the donation you make to such a charity may be tax deductible for you when you file your taxes. Why is this important? First, before you give, you want to get proof of a charity’s 501(c)(3) status, which says that the IRS has deemed it eligible to receive tax-deductible contributions. Don’t just take their word for it. Second, you need to understand that not every dollar donated to a tax-exempt organization will be tax deductible for you. For example, if you buy a ticket to a tax-exempt charity’s fund-raising dinner for $100, and the actual value of the meal is $40, only $60 of your gift may be tax deductible.

The bottom line: Your charitable giving should be planned and budgeted for just like all of your other expenses. As soon as the New Year begins, determine how much money you plan to reserve for charitable donations for the year, and which organizations and causes you plan to support. That way, you can ensure that you

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