CLARK – After seeing the images of devastation in Japan caused by the earthquake and tsunami on Friday, many people will want to donate to humanitarian relief efforts. While there are many organizations collecting money for the cause, Clark accountant Thomas Angelo, CPA advises you to do your research before sending your contribution.
“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 Angelo, a partner at SGA Group, PC and a member of the New Jersey Society of Certified Public Accountants.
To research charities, you can these online resources:
- 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.
“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.
If you plan to claim your donation on next year’s tax return, be sure to obtain documentation – receipts, credit card statements or a letter from the charity.
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