How are you coping with the seemingly endless charitable appeals at this time of year? If you're like most Americans, both your mailbox and your in-box are stuffed with donation requests. Your friends may also be ramping up charitable appeals on Facebook. Experts acknowledge that it's normal to feel overwhelmed.
When limited money meets incessant demand, hard choices must be made, said Eileen Heisman, president and chief executive of the National Philanthropic Trust. Her strategy is to divide the charity budget in thirds: Give one-third to well-established national organizations, such as the American Red Cross or the World Wildlife Fund; another third to smaller, emerging charities in your local area; and reserve the final third for "targets of opportunity."
What's a target of opportunity? That's when you respond to, say, a call to help the victims of a natural disaster or to give to a cause brought to your attention by a friend.
Investigate before you donate
However, what's even more important is checking out charities before you give.
"You're never going to be able to satisfy all of the appeals," said Art Taylor, president and chief executive of the Better Business Bureau's Wise Giving Alliance. "Every dollar matters."
The ideal situation is to check out charities thoroughly at your leisure, long before you write any checks. But if you started the season without doing that and you're now trying to get your donations in before year-end to get the benefit of charitable contribution deductions, you may need to scramble.
However, you should know that the tax law changed last year, which may reduce the year-end charitable rush, said Heisman. In a nutshell, the standard deduction was boosted to $12,000 per person and $24,000 per couple. Your charitable contributions are now deductible only if total itemized deductions -- including charitable giving -- exceed the standard deduction threshold.
Your strategy for checking out charities is likely to vary based on the type of organization you're giving to. If, for example, you use Heisman's "rule-of-thirds" method, you'll easily be able to investigate the national charities online by using either the BBB's Give.org or Charity Navigator.
Both sites rate charities on a variety of criteria, including the ratio of money spent on programs versus administration and marketing, as well as disclosure and accountability. Beware of sound-alike organizations, Taylor cautioned.
A tremendous number of copy-cat organizations try to capitalize on the good work that well-known national charities do. The phonies use names that sound identical, or nearly identical, to a better-run group. For instance, of the 30 organizations that have "American Cancer" in their names on Give.org, only five have received the BBB Accredited Charity stamp of approval.
Make sure you know both the name and the address of the charity you're giving to, and cross-check both data points against the charity databases.
Few groups rate smaller and emerging charities, but you may be able to check them out on your own. Heisman suggested starting with the charity's website to see if it has a so-called 990 form linked on the site. The 990 is an IRS-mandated disclosure that lists the charity's revenues, expenses, key officers and salaries, as well as the organization's mission.
If all those details look good to you, your next step should be to look for people you know who are on that charity's board of directors, or volunteer. Does the charity's actions reflect the stated mission? Is that mission one that's important enough to you to financially support? Does the charity track its effectiveness? If so, is it as effective as other organizations that do the same?
If everything comes up roses, you can feel comfortable pulling out your checkbook.
Targets of opportunity
What about the frequent requests from friends -- the personal notes, emails and Facebook requests? Heisman recommended considering those like you would party invitations. Is this a good friend? Something you'd like to do? Do you have the money to do it?
You should also realize that if you're giving through Facebook, the charity isn't going to get your donor information, Heisman said. Thus, if you give this way, you'll miss out on getting any further information directly from that charity. If you want to stay in touch with the group because you believe in the mission, donate directly, she suggested. You can always send your friend a message noting that your gift was made to support his or her cause.
But never feel guilted into giving, Taylor stressed.
"Many people, particularly elderly people, feel they're obligated to give money when they get an appeal -- almost as if the appeal were an invoice," Taylor said. "You should never feel obligated."
He added: "Establish a budget for what you want to give each year, and determine which causes matter to you. Then, only give to organizations that can help you achieve what you want to achieve."