The tragedy in Japan is one that makes us want to open our wallets and help in a practical way. But with every tragedy there arises a new crop of scamsters, out to make a profit off of someone else's sorrow. How do you give smart and make sure your dollars go to the people who need it most? Follow these tips:
Email Scams
McAfee recently reported a significant increase in the amount of spam being generated by "Japanese Earthquake Relief" scams. So NEVER respond to an email, even if you suspect it is legit. Do not link to the link provided in such an email. Instead, go directly to your browser and type in the link to investigate--even if it's a charity you recognize. Some criminals are linking to sites like the Red Cross but the link will actually take you to a false site where they skim your money and your credit card number.
Don’t Fund Overhead or Fund Raising
You don’t want your dollars going to pay fat salaries, fancy overhead, or excessive fundraising expenses. The Better Business Bureau’s (BBB) Wise Giving Alliance offers guidance to donors on making informed giving decisions through their charity evaluations, various "tips" publications, and the quarterly “Better Business Bureau Wise Giving Guide.” You can access this information by calling (703) 276-0100, going to www.give.org
You can ask them to mail you the various tip guides or read them online. These guides include information on:
Charitable Giving
Police and Firefighter Organizations
Handling Unwanted Direct Mail From Charitable Organizations
Child Sponsorship Organizations
Direct Mail Sweepstakes and Charities
Contributing Used Cars to Charities
Tax Deductions for Charitable Contributions
Record Keeping
If you itemize, you’ll need all receipts for donations of $250 or more. If you give away more than $250 worth of clothing throughout the year, you should have saved all receipts for tax purposes. The money donated directly to a needy person is not deductible. It would be better to donate the amount, anonymously, to your church and have them send the donation to the family in need. Check with your tax specialist every year for your state and federal tax laws.
Starting Your Own Foundation
If you are fortunate enough to have a large gain from a stock or mutual fund that you have held for over a year, consider using it to become what is essentially your own “foundation.” For example, if you own $5,000 worth of stock that you bought years ago for only $1,000, then you can donate the stock by setting up a Fidelity Charitable Gift Fund account (call 1-800-682-4438 or go to www.charitablegift.org ) By doing this, you get an immediate $5,000 tax deduction and save having to pay taxes on the $4,000 gain. In the years to come, as that $5,000 grows, you instruct the company that manages your “foundation” where to donate the proceeds. Besides Fidelity, there are also charitable gift funds available thorough Vanguard at 1-888-383-4483 or www.vanguardcharitable.org or Schwab at 1-800-746-6216 or www.schwabcharitable.org .
Kid Philanthropists
You may want to allow your children to manage a donation in a predetermined amount $25, $50, or whatever you have budgeted.) They get to research a variety of non-profit organizations and decide which one will receive their donation. Then donate the amount in your child’s name. You get the tax benefit, your child gets the thank you note—you both feel good about giving.
Ellie Kay
America's Family Financial Expert (R)
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