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CBS This Morning - Avoid Charitable Scams
BONUS Episode - Charitable Giving Boot Camp on #GivingTuesday
Instead of the usual Tuesday BONUS call, we’re doing something different for this week only.
Today is “Giving Tuesday”, a global day of charitable giving, which was created to balance the vast consumerism that flourishes during Black Friday weekend through the end of December.
To help explain the importance of philanthropy and how to maximize your annual giving, we’re fortunate have Michael Thatcher, the CEO of Charity Navigator as our guest.
Founded in 2001, Charity Navigator has become the nation's largest and most-utilized evaluator of charities. Their team of professional analysts has examined tens of thousands of nonprofit financial documents. Using the information they’ve gathered, they have developed an unbiased, objective, numbers-based rating system to assess over 8,000 of America's best-known and some lesser known, but worthy, charities.
The timing is perfect, because our sponsor, Betterment, is now offering a service that will allow customers to donate shares from taxable accounts to charitable organizations.
All Betterment customers with appreciated shares will be able to donate long-term investments from their taxable accounts. This feature is one that Betterment is particularly excited to offer customers as it’s part of their deep commitment to giving every investor the high-quality advice that has traditionally only been offered to high-net-worth investors.
When deciding when or where to donate your money, Michael says that in order to be impactful, you need to know where your money goes. He also notes that giving shouldn't be hard, so work with organizations who make the process easier. And remember, all donors who open their hearts, minds, and wallets to good causes, are philanthropists.
So go forth and do your annual good deed...but before you do so, use a strategy that can help you maximize your gifts.
“Better Off” is sponsored by Betterment.
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Charitable Giving: 4 Smart Steps
As Republicans negotiate changes to the tax code, one area is set to remain the same: charitable giving. That said, because both the House and Senate proposals nearly double the Standard Deduction, fewer taxpayers will be itemizing, which means they will be giving for the sake of giving, not to reduce their tax bills.
CFP® Pro Tip of the Week - November 24, 2017
Giving Tuesday: Charitable Giving Tips
As the year comes to a close, charities are stepping up their fundraising efforts, starting with Giving Tuesday campaigns. While philanthropy is a wonderful way to promote causes about which you care deeply, there have continued instances of fraud associated with this time of year. The IRS has raised the red flag about charitable scams, especially those that use recent disasters and tragedies to try and steal money or extract private information from well-intentioned people. “Their schemes include contacting people by phone, social media, email or in person and pretending to be from a charity that helps disaster victims.” The increase in fraud means that you need to do a little work, before you give. Start by confirming the group’s name to determine it’s legitimate. Even if it is a genuine non-profit, there could be a case of mistaken identity. There are hundreds of organizations devoted to children or cancer, so go to the group’s website to see how it spends its money. You can also see what others say about the organization by going to the Better Business Bureau’s (BBB) Wise Giving Alliance, Charity Navigator, Charity Watch, and GuideStar.
The Federal Trade Commission recommends that you just say NO to any solicitation if the representative asks for money, but refuses to give you full details about the group’s identity, mission, costs and how it will use your donation; uses high-pressure tactics, like trying to get you to donate immediately, before you can do research or think it over; asks you to send cash or use a money transfer; offers to send a courier or overnight delivery service to collect the donation immediately; promises to enter you in a sweepstakes or give you a prize for donating; won't provide proof that a contribution is tax deductible; uses a name that closely resembles that of a better-known, reputable organization; or thanks you for a pledge you don’t remember making.
To ensure that you are donating to a qualified charity, which is entitled to a tax deduction, you can use the Exempt Organizations Select Check tool at IRS.gov. You can also find legitimate charities at fema.gov. Officials note that you should never provide your Social Security number, credit card and bank account numbers or passwords to anyone who solicits a contribution from you. If you think you’ve been the victim of a charity scam or if a fundraiser has violated Do Not Call rules, file a complaint with the Federal Trade Commission.
Once you have determined that the organization is legitimate, you will want to know that its finances are healthy and that it is efficient, ethical and effective. Charity Navigator provides 0 to 4-star rating system, which includes a review of each charity’s fiscal performance. The site also helps you understand what portion of your donation goes to support overhead, versus goes to the cause itself.
If the donation qualifies and if you itemize your tax deductions, charitable contributions made to qualified organizations may help lower your tax bill. Procrastinators take note: to qualify for write-offs of charitable contributions, your payments must be postmarked by midnight December 31st -- just writing “December 31st” on the check does not automatically qualify you for a deduction; and pledges aren’t deductible until paid. Donations made with a credit card are deductible as of the date the account is charged.
You should maintain a bank record or written communication from the organization containing its name, the date and amount of the contribution. For text message donations, flag the telephone bill with the name of the receiving organization, the date of the contribution, and the amount given.
All of this may seem like a little more work than you might have hoped, but your time and generosity will pay long-term dividends.
Charitable Scams
During the holiday season, charities step up their year-end appeals to raise money. While it’s wonderful to support these organizations, it’s important to guard against potential scams, especially if you get a request from an unfamiliar group. The first step is to confirm the group’s name to determine it’s legitimate. Even if it is a genuine non-profit, there could be a case of mistaken identity. There are hundreds of organizations devoted to children or cancer, so go to the group’s website to see how it spends its money. You can also see what others say about the organization by going to the Better Business Bureau’s (BBB) Wise Giving Alliance, Charity Navigator, Charity Watch, and GuideStar.
The Federal Trade Commission recommends that you just say NO to any solicitation if the representative asks for money, but refuses to give you full details about the group’s identity, mission, costs and how it will use your donation; uses high-pressure tactics, like trying to get you to donate immediately, before you can do research or think it over; asks you to send cash or use a money transfer; offers to send a courier or overnight delivery service to collect the donation immediately; promises to enter you in a sweepstakes or give you a prize for donating; won't provide proof that a contribution is tax deductible; uses a name that closely resembles that of a better-known, reputable organization; thanks you for a pledge you don’t remember making.
Some scammers focus on specific causes to play on your generosity. Rip-off artists often focus on emotional appeals or disasters in the news. The Federal Trade Commission notes an increase of fraudulent charitable solicitations for Veterans and Military families, as well as call on behalf of Police and Firefighters. In both cases, ask for identification; how your contribution will be used; and if your contribution is tax-deductible. If you are unsure, call the organization to verify a fund-raiser’s claim to be collecting on behalf it.
If you think you’ve been the victim of a charity scam or if a fundraiser has violated Do Not Call rules, file a complaint with the Federal Trade Commission. Your complaints can help detect patterns of wrongdoing and may lead to investigations and prosecutions.
If all seems legit, then it’s time to see whether the organization is efficient, ethical and effective. Charity Navigator provides 0 to 4-star rating system, which includes a review of each charity’s fiscal performance. The site also helps you understand what portion of your donation goes to support overhead, versus goes to the cause itself.
If the donation qualifies and if you itemize your tax deductions, charitable contributions made to qualified organizations may help lower your tax bill. (See IRS Publication 526 for rules on what constitutes a qualified organization.) You have until December 31st to make your donations if you plan to deduct them on your 2014 tax return. Before you get too excited about that deduction, you should know the difference between “tax exempt” and “tax deductible.” Tax-exempt means the organization doesn’t have to pay taxes. Tax deductible means you can deduct your contribution on your federal income tax return. You can check an organization’s tax status at www.irs.gov/app/eos.
To claim the charitable deduction, make sure that you maintain a bank record, payroll deduction record or a written communication from the organization containing the name of the organization, the date of the contribution and amount of the contribution. For text message donations, a telephone bill will meet the record-keeping requirement if it shows the name of the receiving organization, the date of the contribution, and the amount given.
Being charitable is a wonderful, but make sure that you are clear that the organization is real and that its mission is aligned with your personal goals.
