Hurricane Irene Donations: How to Give Safely

Last Updated Aug 31, 2011 9:53 AM EDT

Hurricane Irene has not only cost businesses, cities and towns billions of dollars in damage, it has left many individuals and families displaced from their homes. Some are short on food and basic necessities due to massive flooding. Several lie injured in hospitals, and for about 42 people so far, the storm has proven deadly.

Naturally, many of us will want to support the clean-up efforts and lives of struggling victims with monetary donations. But it's important -- as it is any time we donate money -- that we do it safely, and that our money goes to help make an actual difference. Unfortunately, during heightened times of crisis, charitable scams run rampant. To address this, the Better Business Bureau has offered several tips on how to watch out for fraudulent organizations requesting donations and how we can all give effectively.

Research the Charity
Before giving away any money, take some time to review the nonprofit's website and visit third-party charity watchdog sites to make sure the organization is truly who it says it is. I'd start by checking the National Association of State Charity Officials, Guidestar, and the BBB's Wise Giving Alliance. If you want to take it a step further, the BBB points out that you can a charity's tax-exempt status through the IRS.
Find Out if the Charity's a Middleman
Some charitable organization may actually just be raising money to forward along to other relief groups. If this turns out to be the case, the BBB says you may want to avoid the middleman and give directly to the local charity and the recipients you want your money to reach. With no interference, you can be more certain that your money is going to where you actually want it to go. It's a more certain way to give.
Know the Limits of Texting Donations
After announcing people could donate $10 by texting "HAITI" to 90999 last year, the American Red Cross raised a whopping $4 million in 36 hours. Clearly, texting donations are a great way to quickly raise money for a cause -- but, the BBB cautions, it can be a limiting way to give. Your contribution may be restricted to a certain small amount and it may take months to be applied.
If your hope is to help immediately and with a larger amount of money, give directly through the charity's Web site or by phone
Beware of "100%" Donation Claims
Sometimes a charity claims its donations go 100% or "fully" to the cause. But let's be real; even the most virtuous of nonprofits have expenses. Some of your donation will go toward administrative costs or fundraising. As the BBB reminds us, even a credit card donation will involve a processing fee.
That said, a substantial amount of your money should support the actual cause. The BBB Standards for Charity Accountability states that at least 65 cents out of every dollar donated should go to a charity's programs and services. You can find out the breakdown by simply asking a charity what its costs are as a percentage of every donated dollar its receives; Charity Navigator also evaluates nonprofit groups for efficiency.
Check a Charity's State Registration
A majority of states require charities to register with a state agency, such as the office of the attorney general or the Secretary of State, before being permitted to solicit contributions. You can do background checks on your state agency's Web site. The BBB says you may want to steer clear of newly formed groups that have little to no track record of providing disaster relief.
Farnoosh Torabi is a personal finance journalist and commentator. She is the author of the new bookPsych Yourself Rich, Get the Mindset and Discipline You Need to Build Your Financial Life. Follow her at www.farnoosh.tv and on Twitter/farnoosh
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    Farnoosh Torabi is a personal finance journalist and commentator. She is the author of the new book Psych Yourself Rich, Get the Mindset and Discipline You Need to Build Your Financial Life. Follow her at www.farnoosh.tv and on Twitter at @farnoosh.

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