It’s season of online giving, but watch out for scams
The period between Thanksgiving and New Year’s Eve is a time of giving. One reason is, of course, the holiday spirit. Another is that many charities reach out during this period, beginning on “Giving Tuesday” — the day after Cyber Monday. Another reason, for many taxpayers, is that it’s the last chance to get a tax deduction by giving to a federally recognized tax-exempt nonprofit.
For families, consider getting everyone involved. Your children may not know the name of a good charity to support, but they may have a cause or interest that is promoted by a legitimate charity that you can research together.
If your kids are old enough to do online research, have them help you vet the charities to make sure they’re using your money wisely. You might want to divide your donation budget into smaller chunks and give to more than one charity or you might want to encourage your children to donate some of their own money to raise money for a charity
through something like a bake sale.
You can also donate and raise money via social media, subject to the cautions below. I’ve been supporting my friends’ Facebook fundraising campaigns. Even if it’s a small amount, not only does it help, but it also shows your support for the charity and your friends’ efforts.
There are some very good causes that advocate political action that are not tax-exempt. That doesn’t mean they’re not worth giving to, but you won’t get a tax deduction. Donations to political candidates or parties are also not deductible. As with charities, if you donate to a political cause, do some research to make sure it’s doing work that you feel good about.
An alternative to charitable giving is to invest in microfinance through a service like Kiva. When you invest, what you’re doing is loaning money to an entrepreneur or group of entrepreneurs, typically in a developing country. The borrower will pay back the loan over time and usually pay interest to support Kiva’s local field partners, however neither Kiva nor individual lenders receive any interest. Still, Kiva points out that it has a 96.9 percent repayment rate so “when you’re repaid you can use the money again.” I like giving children Kiva gift cards (in increments of $25) so that they can decide where to invest the money, knowing that they’ll later be able to use it for college or some other purpose after it’s been repaid.
Legitimate charities
You will undoubtedly get a lot of pitches via email but, before you donate, make sure they are from a legitimate charity and be very careful before clicking on any links in email or a social media post. It’s safer to type in the name of the charity directly. One possible exception is Facebook’s Donate button. If a friend is raising money for a nonprofit on Facebook, you can safely donate as long as you are sure that you support the charity listed.
Do be careful about the amount. Sometimes it will default to a specific amount, so if you’re not comfortable donating that sum, click on a different amount or enter the number yourself.
Safe donation tips
• Donate only to organizations you know and trust and do some research. Make sure you know the charity’s purpose and consider taking a look at financial records, including the percentage of its budget that goes into fund-raising. CharityNavigator.org and GuideStar.org have information on nearly every federally recognized charity. There are also Give.org and CharityWatch.org, which rate many but not all charities. All federally tax-exempt nonprofits must file an IRS Form 990 public tax return. You can sometimes find these forms on CharityNavigator or GuideStar or can do a search with the name of the charity followed by 990.
• Make sure the donation is going to the right charity. Scammers can use a similar name or cause that you assume to be a legitimate charity.
• Don’t be pressured by telemarketers. You may get calls during the holiday season asking for a donation. There is a good chance that a substantial portion of that donation will go to the telemarketing company. If you are told that the money is going to a local agency, such as a hospital, animal shelter or program of a police or fire department, check with the agency before donating and consider donating directly to that agency.
• Be very cautious before donating based on a link in an email or social media post. It could be a scam or even take you to a website that looks like a legitimate charity. It’s best to go directly to the charity’s website. Look at the web address carefully to make sure it is the site of the real charity.
• Guard your personal information. Never give out your Social Security number to a charity. It doesn’t need it. Be sure you’re dealing with a legitimate charity before giving out your credit or debit card information or your name and address. Look for the organization’s privacy policy to see if it shares its donor lists.
• Never donate cash, by wire transfer or gift cards: Legitimate charities will accept credit or debit cards, payment services like PayPal or allow you to pay via Facebook. Credit and debit cards come with some fraud protection.
And thank you in advance for your generosity this holiday season.