Hey, Where’d My Donation Go?
Hey, Where’d My Donation Go?
In the age of recycle, reduce and reuse, it’s always a good thing to donate your gently used items to a charitable organization and keep them out of a landfill. But how can you know if your donation is being used wisely?
The great majority of charitable organizations exist for one reason: to help. And, according to the National Philanthropic Trust, Americans donate over $240 billion per year to various charities - and that’s just money. The contributions of goods and services add up to even more.
But still, you might wonder where your donation goes.
Unless you ask, you might not ever know where your donation ends up or what happens to the proceeds a charity receives from your non-cash donation. Fortunately, websites for charities like Goodwill Industries, the Salvation Army and the American Red Cross all list exactly how your donations help the needy. But any person representing a charity should be able to tell you basic information about that charity, like how much of your donation goes toward administrative costs. A good rule of thumb is that if a person representing the charity won’t or can’t provide information about how your donation is used, that’s a big red flag.
But you don’t have to shy away from a charitable group just because they’re smaller, specific (especially one’s that target local problems in your area) or new. Just do your homework.
First, you’ll probably want to make sure you agree with the charities stated aims. Read everything you can about the philosophy of a charity you want to support. For instance the statement “to help animals” is pretty broad. Ask questions: What animals, where, how and why. If you’re not satisfied with the answers you’re given, find another group.
You can also find out about charities by visiting the IRS. Don’t feel sneaky, you have a right and an obligation to those you’re trying to help to establish that what your giving is being used for the intended purpose. The IRS has a Form 990, “Return of Organization Exempt From Income Tax” that will tell you a lot about the organization you’re donating to. This form is probably your single best piece of information about a charity, because it’s the way the government prevents abuse of tax-exempt status. The form gives information about the organization’s finances and how money is collected and spent. Keep in mind that although some groups may spend more on overhead than others, that doesn’t necessarily disqualify a group from your consideration. Larger non-profits may have more expenses for outreach or large, multi-year projects.
Most people look for ways to help others. Whether you volunteer, give a cash gift or donate used items to causes you support, you want to know that your gift is being used wisely and that it’s getting to those who need it the most.
Go to Publication 526 from the IRS website to get info about deducting charitable donations.
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