Every year Michigan residents make generous donations to charities that do good work in our communities. Despite all the good work of charities, I want to remind you of a couple steps you may wish to follow to make sure your donation is used wisely. You can also view a Top Ten List for Donors here.
First, research the organization. Consider asking what is the organization’s purpose? This question will help determine whether or not the charity works on an issue you wish to support.You may also want to ask how your money will be spent. Will the money go to a certain program or to support a certain geographic/demographic area, and how much of the money will be spent on administration and fundraising versus programming? You also want to determine if your donation is tax-deductable. Only donations made to organizations with a section 501(c)(3) tax designation are eligible for a tax deduction on the federal level. Also, only donations made to specific types of charities are eligible for a tax credit in Michigan.
Next, don’t just hand over the money. When you feel confident this organization is the right fit for your investment, consider the following when making your actual donation: make your contribution by check so you have a record of your donation; make the check payable to the organization, never to an individual; ask for and keep receipts from the organization indicating how much you donated, the date and its intended use; and to avoid ID theft and fraud, use caution before giving credit card numbers via the phone or email.Also, when donating on the internet, check to see if the organization is using a secured site for financial transactions.
For additional information, and specifically for large donations, you may consider asking for the following materials or viewing this information online. Obtain a copy of the charity’s latest IRS Form 990; this is the reporting mechanism required by the Federal government for all charities with operating expenses above $25,000 a year. Form 990s can be viewed through Guidestar. Ask if the charity has a Charitable Solicitation License from the Michigan Attorney General allowing them to solicit funds. Most charities that raise more than $8,000 a year or pay for fundraising services are required to file for this license. The list of organizations with a solicitation license is available here. You should also view the group’s latest annual report and latest financial statements. These documents provide insight into the type and degree of services being provided and indicate how much of the donations are applied to actual programming vs. administrative and fundraising. For more information, contact the Charitable Trust Section of the Michigan Attorney General.
Are you planning on giving to charity this holiday season? Do you have any stories about giving traditions or your experiences? We would love to hear from you!
Note: This post is authored by guest blogger Marion Gorton. Marion previously worked as a charitable trust administrator for the Michigan Department of the Attorney General, administering the office that oversees charities. Since retirement from the AG’s office in December 2005, she has worked at the Michigan Nonprofit Association as a program specialist and public policy specialist.