Donating to a charity can be a win-win at tax time. Not only are you able to support a cause you care about, but you are able to claim your contributions. However, what happens when the charity you’ve given to turns out to be fraudulent? You’ve now donated to a false entity, haven’t helped the cause, and cannot write it off on your taxes.

In today’s digital age, legitimate nonprofits can reach wider audiences than ever before. Unfortunately, the same tools that help real organizations spread their message can also be used by scammers to create fake charities that gain traction quickly, especially during times of crisis or disaster.

Even among legitimate organizations, some may mishandle funds or fail to allocate donations effectively, raising concerns about how your money is being used.

Consider these tips to help confirm if the charity you want to donate to is making an impact.

Check the Legitimacy

Before donating, take a moment to verify the organization through a trusted source. The IRS Tax Exempt Organization Search Tool is a reliable way to confirm that a charity is legitimate and that your donation is eligible for a tax deduction. Check  their 501(c)(3) status. There are other types of organizations that accept contributions and allow you to take a deduction, but they vary, and sometimes the deduction allowed is as a business deduction, not a charitable contribution. Either way, the ability to accept deductible donations is a key qualifier of a legit charity.

When researching charities online, check the URL. Many charity URLs end in .org instead of .com or .net. Also, double-check the spelling and look for missing or extra letters.

You’ve Got Mail

If you receive an email claiming to be an organization that’s seeking donations, asking you to download any sort of file or open any attachments, report it as spam and delete it. There’s a chance that those files could be carrying a virus that purpose is to steal your personal information.

The only exception is if you receive an email from an actual organization that you have donated to previously.

Always Get a Receipt

Having confirmation of your donation is essential, especially if you donate over $250. This is the IRS cutoff for proof of donation. While you can provide a canceled check as proof, it may be more difficult to provide that proof when giving online. The organization should always provide a receipt for any donation of $250 or more.

Transparency Matters

Even if a charity seems legitimate, it may not be effectively helping the cause(s) it represents. To ensure your donation makes an impact, review the organization’s annual reports and documentation to see how it allocates its funds. The Charities Review Council recommends that at least 65% of a charitable organization’s total expenses go toward its programs. Most organizations make their annual reports available on their website, and you can always request one directly from the charity if it's not easily found online.

However, remember that many organizations wouldn’t exist without staff that provides expertise, runs programs, and maintains finances. Overhead is necessary and expected, but it’s crucial to ensure that donations aren’t being used solely to cover administrative costs.

Report Abuse

If you believe a charity you’ve seen or have donated to is a scam, report it to the Federal Trade Commission at 1-877-382-4357, or use their Online Complaint Assistant. You can also report questionable emails and websites to the FBI’s Internet Crime Complaint Center.

By spending a few minutes researching, you can help ensure your money is going to a worthy cause that will use it wisely, creating a  meaningful impact.
 

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