How to tell if a charity is legit

The end of the year is often when people look for good causes to which they can donate. While recent changes in the tax code make charitable donations less effective as a tax strategy, many people will continue to donate for personal reasons. Before donating, you want to make sure your chosen charity is legitimate.

You might have a favorite charity, like a local group or someone with whom you’ve worked for years. If not, finding the right charity can be a difficult task, both because unethical individuals may want to exploit the best intentions of others and because running a nonprofit organization is a difficult task, making many well-intentioned charities ineffective at fulfilling their mission.

Check out the charity with an objective watchdog group

One of the challenges with charitable giving is to understand how the charity will use your money. One good way to determine whether a charity is an effective organization and worthy of your donation is to check with the two biggest charity watchdog organizations: Charity Navigator and Charity Watch, both of which are also endorsed by Consumer Reports.

Every charity files an annual tax document called a Form 990. This form contains valuable information that can tell you how the charity is raising and spending its money. You can look at the Form 990 for any non-profit based in the United States by visiting The Foundation Center’s 990 Finder.

Verify each charity’s tax-exempt status

Never assume an organization has a tax-exempt status, even if it might seem like it does or should. Even if your donation was tax-exempt last year, even if someone involved in the organization tells you that they’re tax-exempt, even if you’re 99 percent sure the organization is tax-exempt, check with the IRS' Tax Exempt Organization Search

Always give money directly

One way that scammers will use the goodwill of donors for their own benefit is to call people and ask for donations over the phone. Don’t assume that someone who calls you actually works for the organization. Instead, finish your conversation and then donate directly to the organization. Donating directly also gives you more control over the paperwork, ensuring you get all the documents you need for a tax deduction.

Make sure to request privacy

Many charities have privacy policies that ensure your contact information will not be sold or shared with other organizations. Still, you should make certain of that. Before you make your donation, ask about the charity’s privacy policy. If you are not satisfied with their standard practice, ask that your name be withheld from any promotions or solicitations they may do. And ask that your name not be included in any lists they may share.

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