Making Wise Giving Choices
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This document provides information about charitable giving and how to ensure donations are tax deductible. It discusses the difference between tax exempt and tax deductible organizations, and notes that most charities classified by the IRS as 501(c)(3) are tax deductible. The document also discusses BBB charity standards regarding governance, effectiveness, finances, and solicitations to help evaluate charities. Tips are provided such as donating items instead of cash, researching charities online, and getting tax records for donations.
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Making Wise Giving Choices
- 2. ๏ฎ Tax Exempt vs Tax Deductible ๏ฎ BBB Charity Standards ๏ฎ Giving Basics ๏ฎ Thrifty Ways to Donate ๏ฎ Your Questions!
- 3. ๏ฎ You want your gift to make an impact ๏ฎ You want to make sure the gift is tax deductible
- 4. ๏ฎ Tax exempt organizations do not pay income taxes ๏ญ Better Business Bureau (Business organization) ๏ญ AARP (civic organization) ๏ญ Kansas State Troopers Association (fraternal organization) ๏ญ Harvesters Community Food Network (charity)
- 5. ๏ฎ Tax deductible means that a donor can deduct contributions from his/her federal income tax return. Most are classified by the IRS under section 501(c) (3) ๏ญ Harvesters ๏ญ Places of worship (churches, synagogues, etc.)
- 7. Publicly soliciting organizations that are tax-exempt under section 501(c) (3) of the Internal Revenue Code
- 8. Full disclosure to donors and potential donors Standards go beyond laws and regulations
- 9. ๏ฎ Governance ๏ฎ Effectiveness ๏ฎ Finances ๏ฎ Solicitations and Informational Materials
- 10. Information we review: โขIRS form 990 โขAudited Financial Statements โขAnnual Report โขFundraising Appeals โขWebsite โขBoard Roster Public information that you can review, too!
- 11. ๏ฎ Do not give cash ๏ฎ Keep records of your donations for tax purposes ๏ฎ Don't be fooled by names that look impressive or that closely resemble the name of a well-known organization. ๏ญ Make A Wish Foundation (seal holder) ๏ญ Childrenโs Wish Foundation International (nondisclosure) ๏ญ A Childโs Wish (nondisclosure)
- 12. ๏ฎ Research charities ๏ญ Council of Better Business Bureaus: www.give.org ๏ญ BBB of Greater Kansas City: www.kansascity.bbb.org ๏ญ Kansas Charity Check: www.kscharitycheck.org/main.html ๏ญ Missouri Check a Charity: http://ago.mo.gov/checkacharity/ ๏ญ Donors Edge: www.gkccf.org
- 13. ๏ฎ Toys, Food, or Other Items ๏ญ Make sure items are needed and in good condition! ๏ฎ Shop Thrifty ๏ญ Shopping thrift stores benefits charitable programs ๏ฎ Your Time ๏ญ Serving clients or working behind the scenes ๏ฎ Your Voice ๏ญ Donor advocacy can help advance policies that will further and organizationโs mission
- 14. โข Know where to get the info you need to make sound giving choices โข Look past names, and focus on what organizations actually do โข Make sure your contributions are tax deductible โข View a growing list of reports on local charities at www.kansascity.bbb.org If you want the BBB to report on more local charities, please call us! 816.421.7800 Contact me at charityreview@kansascity.bbb.org
Editor's Notes
- What we look for
- Note that these standards donโt apply to charities that donโt solicit funds from the general public (ie. Churches (get funding from congregations) or private Foundations, like the Kauffman Foundation). They also donโt apply to fraternal organizations or business organizations (like the BBB!).
- Standards go beyond laws and regulations. Ex. There is no law that says that a nonprofit organization canโt spend 90% of the money it fundraises for its own administration. But an org. wonโt meet our standards if that is their practice. Assist donors in making sound giving decisions. Save Grandma!!! Foster Public confidence in charities A free market and a free society depend on information being available to for people to make good decisions about how to spend their money. The Charity Information Service fills a need to provide the public with that information and the Standards are our biggest tool.
- Governance: The governing board has the ultimate oversight authority for any charitable organization. This section of the standards seeks to ensure that the volunteer board is active, independent and free of self-dealing (not using org. to serve own self-interests). One big difference between charities and for-profit businesses is in how they are governed. Businesses- boards are paid. Charities โ boards are not paid and board members should not monetarily benefit from their board service in any way. With this in mind, charities of boards need to be active in managing the organizations. Effectiveness: This section of the standards seeks to ensure that an org. has defined, measurable goals and objectives in place and a defined process in place to evaluate the success and impact of its program(s) in fulfilling the goals and objectives of the org. and that also identifies any deficiencies. EX: What if Harvesters had a dog walking program? Would it serve its mission? Finances: This section of the standards seeks to ensure that the charity spends its funds honestly, prudently, and in accordance with the statements made in fund raising appeals. If an organization claims to help feed people in need, but most of their financial statements indicate that most of their expenses pay for their own fundraising efforts, we note that in our reports. Also, an organization can be very well-meaning , but be poorly managed. Information in our reports gives prospective donors the information they need to assess that. By working with us and aiming to meet all of our Standards, organizations can help themselves. Solicitations and fundraising materials: A fund raising appeal is often the only contact a donor has with a charity and may be the sole impetus for giving. We check to ensure that information contained in a fundraising appeal matches up with information reported in financial documents
- Toys: Disposing of unwanted or unusable โgiftsโ actually costs charities heavily in manpower and fuel costs Shop Thrifty: Buyers should note though, that not all thrift stores equally benefit the charities whose names are associated with them. โ Ask them! Time: Volunteering doesnโt have to involve direct assistance to those in need (like ladling soup at a homeless shelter). Assisting with office work or other behind-the-scenes tasks can be just as helpful. While the value of a donorโs time is not deductible, some out-of-pocket expenses directly related to volunteering, like transportation costs, may be. Voice: Charities canโt promote political candidates but they can urge or lobby for public policies that further charitable causes. Donors may be asked to contact their representative in relation to certain legislation. Many charities also advise on how donors can further their programs through advocacy in local communities.