Ways to Avoid Donation Mistakes

Making a donation to your favorite group or charity is a great way to support a favorite cause and/or give back to your community. It is important, however, to avoid giving your money away without doing the right research or taking the proper steps to ensure that your money is being used how you intend. Be careful to follow these tips when giving to your favorite non-profit organization.

Check the legal status of the charity.

Legitimate non-profit organizations apply for tax-exempt status from the state and federal government. If the organization you’re giving to does not have a non-profit number or  501(c) number, it is possible that it is scam. Of course, it should be noted that sometime brand new charities have not filled out the paperwork in order to qualify for this. For this reason, a charity without “exempt” or 501© status should be viewed suspiciously. Do not give to a group like this unless you are very familiar with the people running it.

Read the literature describing what your gift will do.

If you want your money used for a very specific purpose, make sure that your gift is designated only for this purpose. This means getting a written agreement from the charity; simply writing a note on the memo line of the check is not legally binding. By making a general, non-specified donation, the charity has the right to use the money for their overhead or even redirect funds to another part of their organization. The Red Cross, for example, frequently uses money donated at the time of one natural disaster and uses it to buy supplies for the next disaster.  While this is because they already have supplies purchased and ready to be used when a disaster occurs, some people want to know exactly where their money is going.

Keep records of what you give.

While this is a critical step for anyone who wants to use their donation as a tax write-off, it is also important to keep personal records of how much you have donated. This will allow you to track your personal giving, as well as incorporate the giving into your budget.

Think about how you want your donation publicized.

Many people make the mistake of giving a large amount to a charity without specifying that they do not want their personal information shared. Unfortunately, this can mean receiving a lot of solicitations from other charities and sometimes scam artists. If this is a concern for you, keep your donation anonymous.