Do You Know Where Is Your Donation Going? Here’s What You Can Do About It!

Donating to charities for a good cause feels great, right? But are you sure that all your charitable Donations are going to the right place?

According to the latest stats, in 2017, Americans donated $410 billion to charities. But, as we said, how much of that money really was dedicated for charitable purposes is something to think about.

So, what exactly happens with your money? Let’s discuss that.

Compensation for executive and staff.

It’s natural that a Charity has to compensate for the services performed by its executives, staff, and volunteers. So, it’s a given that a specific portion of your donation goes to meet this end. However, every charity must disclose the name of its CEO and also of its staff members and mention their compensation. You can find this information on Form 990.

If a charity does not disclose this information, it is a red flag.

Fundraisers and other events.

Charities have to organize fundraisers, campaigns, and various other social gathering events to keep both the organization and the staff afloat. Such events require a significant amount of funds which might be extracted out of charitable donations itself.

Charitable programs and campaigns

Now, coming to the actual deed – charitable programs and campaigns. The proportion of charitable donations that go into funding the actual charitable events and services vary from institution or institution. For instance, in 2016, the Michael J. Fox foundation dedicated as much as 88.9% of the charity’s total expenses on the promised charitable services whereas the American Cancer Society dedicated 58.4% of its donations on charitable services.

How to know if a charity is genuine and legitimate?

When you donate to a charitable organization, it is your right to know all the necessary details of that institution so that you can be at peace knowing that your donation is helping others or promoting a good cause.

Here’s how you can make sure you’re donating to the right place.

Do a little background research.

This is the most important thing that you should invest your time in before donating to a charity. Since most charities now have an online website, you can thoroughly go through their websites to see the kind of work they perform, the campaigns they’ve done so far, their mission statement and goals, and so on. Look out for reviews and testimonials before taking the leap.

Conducting a background is extremely crucial as many scammers create fake websites and use social media platforms to portray as established charitable organizations. Needless to say, their aim is only to solicit money from you and the donations never make it to those who need your help.

Check the status of the charity.

Another important thing for you to consider is the status of a charity – whether or not it is tax exempt. If its status is 501(c)(3), it means that it has been granted the tax-exempt status by the IRS. So, all the donations you make to such an institution will be tax-deductible.

Do not blindly trust fancy ads or celebrity endorsements.

Often, charitable organizations come up with fancy advertisements and celebrity endorsements. But that does not necessarily mean that it’s an excellent or a credible charity. In fact, if a charity is more into fancy displays of credibility, it will only give you all the more reason to think about where your money will go.

Choose where your donation should go.

Charitable organizations usually have many different kinds of aid programs and services committed to support various causes such as poverty, hunger, animals rescue & adoption, to name a few. If you find a particular cause towards which you wish to donate, you can choose to do so. So, while choosing a charitable organization, make sure it comes with an open window that allows you to choose how your money will be spent.

Apart from these few cautious steps, you can also check a charity’s credibility on platforms like  Charity Navigator, GiveWell, and Guidestar. These sites can provide you with the genuine stats and ratings of charities as to how they use their donations while also displaying a breakup of their expenses.

For any further help, you can contact our tax experts anytime you wish. You can either write to us at [email protected] or call us at 1-(888)-482-0279 today.