Financial

by Richard Hale

If contributing to charities is part of your life, you already know the philanthropic benefits. But, with government funding cuts, rising costs and increased user needs, charities seem to be seeking more of your contribution dollars than ever before. This rising demand means you need to plan your giving and require accountability from the organizations soliciting your support.

According to the Better Business Bureau, 80 percent of the money raised by charities in this country comes from individuals.

To help you make wise giving decisions, here are some charitable giving tips to consider:

?Make sure you understand which organization wants your money. Don't be fooled by names that look impressive or closely resemble the names of well-known organizations.

?Ask if your contribution is tax-deductible. It's important not to confuse tax-exempt with tax-deductible. If a solicitor tells you that the organization is tax-exempt, it only means that it does not have to pay taxes. It doesn't necessarily mean your contribution to that organization is tax-deductible.

?Ask if the charity is licensed by state and local authorities. Registration or licensing is required in most states and communities. Keep in mind that registration does not imply that the state or local government endorses the charity.

?Watch out for statements such as "all proceeds will go to charity." This can mean that only the money remaining after subtracting fund-raising expenses will go to the charity. These expenses can be significant, so be aware of what they are.

?Ask the solicitor if he or she is being paid to make the call. You'll want to know if fundraisers' salaries are coming out of your contribution dollars.

?When asked to donate over the phone, always ask for written information. When you get the information, read it thoroughly to find out how clearly the organization tells you how your money will be spent.

?Ask how and where your contribution dollars will be used. Many donors prefer that their money goes to local charities familiar to them.

?Once you have made the decision to contribute, donate by check made out only to the charity instead of cash, for accountability purposes.

Also, for security reasons, avoid giving out your credit card number for donations.

?Keep receipts (in addition to canceled checks) for deductible donations of more than $250 so you can document your gift at tax time.

Regardless of the dollar value, it's always wise to get a receipt for any charitable contribution.

Guidelines for regular giving. If you make substantial or regular donations to a charity, it's best to ask for a copy of its latest annual report, recent financial statement and the names of the board members. You can learn a lot about how the organization operates by knowing information included in these records.

Are you considering funding for a new organization that does not yet have a financial statement or annual report?

You might want to request a copy of its budget and documentation about the charity's funding goals and proposed programs.

If you have questions about charitable giving or an organization you are considering funding, consult the Philanthropic Advisory Service of the Council of Better Business Bureaus.

While it's important to be well-informed and to choose your beneficiaries carefully, it's also important to consider your charitable giving plan in relation to your overall financial plan. That way you can make decisions that benefit you as well as the organizations you choose to support.

(Richard A. Hale, CFP, is a financial advisor with American Express Financial Advisors Inc.)

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