CLARK – In light of the current humanitarian disaster in Pakistan, you may be seeking ways to reach out and help. And while many organizations worldwide are accepting donations for this cause, it’s certainly in your best interest to evaluate the legitimacy of the organization before you contribute.
“You want to verify that they are spending the bulk of their money on the missions and programs they say they are, and that the percentage of funds they allocate for administrative or fundraising expenses is within reason” says Thomas Angelo, CPA, a partner at SGA Group, PC in Clark and a member of the New Jersey Society of Certified Public Accountants (NJSCPA).
There are several non-fee based and readily-available resources for charity research:
- Charity Navigator (charitynavigator.org) examines how responsibly a charity functions on a daily basis and how apt it is to sustain its programs over time. Other information such as the charity’s commitment to keeping donor’s personal information secure, CEO annual salaries and more is also made available.
- GuideStar (guidestar.org) publicizes non-profit organization tax return information, combined with details provided directly from the organization.
- The IRS (irs.gov) issues Publication 78, a list of organizations eligible to receive tax-deductible charitable contributions.
What should you look for when you take advantage of these resources? “Although there is no magic formula, a general guideline is that for every $1.00 of funding a charity receives, they should be spending about $0.85 on programs directly related to their cause(s) and $0.15 on administrative costs,” says Angelo.
Giving to worthwhile causes boasts the added bonus of a tax deduction at the end of the year. To reap the benefits, remember to support your donations with receipts, copies of checks or credit card statements, and a written confirmation letter from the organization. Zealous givers should keep in mind that their annual tax-deductible contributions cannot exceed 50 percent of their adjusted gross income.
To listen to a free podcast on this and other helpful financial topics, check out the NJSCPA’s award-winning podcast series at moneymattersnj.com/podcasts.
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