The spirit of giving comes alive during the holiday season. The twinkling lights, heartwarming carols, and the festive atmosphere prompt us to reflect on our blessings and share with those less fortunate. Yet, just as you’re contemplating where to donate, scammers are plotting how to deceive. Kiplinger aptly warned that in the face of increasing global disasters, while many reach out to help, scammers reach out to exploit. So, how do you ensure your hard-earned money benefits the right cause? Let’s dive in.
1. Beware of Fake Charities
Given the rise of natural and man-made disasters globally, the urge to donate and make a difference is more potent than ever. Yet, not all organizations waving the charity flag are genuine. As the IRS cautions, it’s essential to verify charitable organizations before parting with your money.
Understanding Fake Charity Scams:
- Fake caller IDs mimicking legitimate organizations.
- Websites designed to resemble genuine charity portals.
- Unexpected and high-pressure calls urging for immediate donations.
Precautions to Take:
- Avoid sharing personal information unnecessarily.
- Refrain from donating via gift cards or wire transfers.
- Research and validate a charity’s name, address, and website independently.
2. Use IRS Tools to Verify Legitimacy
The IRS Tax-Exempt Organization Search (TEOS) tool is a valuable resource to validate charities. Through it, you can determine the tax-exempt status of an organization and whether your donations to them are tax-deductible. It’s a critical step, even if tax deductions aren’t your primary motivation.
3. Understanding Charitable Tax Deductions
If tax deductions matter to you, ensure your chosen charity qualifies. Remember, donating to an individual, even for a noble cause, isn’t tax-deductible. If your donation includes a personal benefit, like receiving a meal, only the difference between your donation and the received benefit’s fair market value is deductible. When donating non-cash items, you’d deduct the item’s fair market value. And while your time isn’t deductible, related expenses might be. Always consult a tax professional for tailored advice.
4. Checkout Counter Charitable Donations: Yay or Nay?
According to The Wall Street Journal, rounding up your bill for charity at checkouts has become ubiquitous. However, while these micro-donations sound innocuous, consumers are growing weary. Many feel that big corporations, already making significant profits, shouldn’t be asking customers for spare change. Some users have also reported accidental or unintended enrollments into donation programs, leading to unexpected contributions.
Moreover, there’s skepticism about where the collected funds go. While some corporations genuinely forward the entire collected amount to charities, others have faced accusations of using these donations for their corporate philanthropic pledges.
Making a Difference the Right Way:
- Awareness: Knowing is half the battle. Being aware of potential scams can shield you from them.
- Research: Utilize tools like TEOS to confirm a charity’s legitimacy.
- Ask Questions: Before donating, especially at checkout counters, ask where the money goes. Ensure the organization is transparent about its funds.
- Be Proactive: Instead of reacting to every donation request, be proactive. Set a yearly budget for charitable donations, research organizations in advance, and donate with intention.
Remember, it’s not about the amount but the intention. By making wise choices, you ensure your contributions make a real difference.