Useful tools for Donors

Form 990, IRS Publication 78, Guidestar, CharitableNavigator, etc.

The Philanthropic Initiative (TPI) describes three stages in the evolution of a donor (discussed in their report “What’s A Donor to Do?”). The three stages are based on a continuum of experience and engagement with philanthropy and are helpful in considering approaches and content in donor education design. The stages are: 1). Dormant, But Reimage of a churchceptive; 2). Engaged, Getting Organized; and 3). Committed, Active Learner. TPI acknowledges that a donor’s learning journey can be a very idiosyncratic and non-linear process:  “Engaging new and emerging donors is not a cookie-cutter approach. Donors come at the world of giving with a wide range of backgrounds, experiences, personalities, perspectives and influences. Some will move rapidly up the curve because of or even despite these factors; others will need a great deal of encouragement and support.”(www.tpi.org)

Donors find multiple pathways into philanthropy. Giving takes place in a range of settings and across multiple vehicles for giving. For instance, a donor could:

Write a personal check or donate online to a favorite cause. Donate through a workplace or other federated giving program. Give through his/her church or religious institution. Open a commercial charitable gift fund at a bank or financial services firm. Use a donor advised fund at a community foundation. Set up a private or family foundation. Contribute through a giving circle. (http://www.hewlett.org/uploads/files/PhilanthropysForgottenResource.pdf)

“Today, with the economy in a downturn, wealthy people are taking a closer look at what charities will benefit from their bequests,” writes Betsy Brill, president of Strategic Philanthropy, a Chicago company that advises people about their giving. “They are taking a hard look at the charitable designations named in their estate plans, which, for many, is a long overdue exercise, since interests, intent, and financial circumstances will have changed since the estate plan was first drafted.”  Source: Forbes magazine’s Website (http://philanthropy.com/blogs/giveandtake/questions-donors-should-ask-as-they-review-bequest-plans/10150)

Fortunately, whatever stage of giving donors may be in, or however wealthy they may be, they do have access to web-based information about the governance and performance of potential grantee.

Here are some useful tools for researching organizations before making charitable gifts to them:

www.charitynavigator.org and www.givewell.org are charity watchdog websites whose purpose is to help individuals make intelligent giving choices by providing information on charities and their financial health.

http://www.irs.gov/app/pub-78/: If donors are interested in making a donation for tax reasons, they should also review the list of organizations on this website in IRS Publication 78 to see if the organization is eligible to receive tax-deductible charitable contributions. If they give money or other gifts (stocks, goods, etc.), and the charity has the proper Internal Revenue Service (IRS) status, they may be eligible to deduct some or all of your contributions. The rules have been significantly tightened in 2007. (http://2020insight.com/charitable-giving-is-on-the-rise/)

DonorEdge, created by the Greater Kansas City Community Foundation, provides donors to community foundations with access to extensive information about more than 650 local nonprofit organizations and allows visitors to donate quickly to any of the organizations listed. The model is now being used by the Greater Houston Community Foundation; The Community Foundation of Middle Tennessee; Denver’s Community First Foundation; Harrisburg, Pennsylvania’s The Foundation for Enhancing Communities; and is under development at The Columbus Foundation.

GuideStar has extensive financial information about more than 850,000 nonprofit organizations and is gradually adding information about organizations’ strategies and goals. However, it still has a long way to go in providing prospective donors with the ability to compare charities and monitor their performance.

IRS Form 990, “Return of Organization Exempt From Income Tax.” This form is probably the single best piece of information about a charity because it’s the way the government prevents abuse of tax-exempt status. There are almost two million American charities. Specifically, you should seek out “qualified organizations.” A qualified organization is called that because it qualifies for a tax deduction. These organizations include religious groups, public schools, not-for-profit hospitals, parks and a variety of other groups. If the organization is not qualified, there is no barrier to giving to that group, but the donation will not be deductible.

Donors can view a charitable organization’s Form 990 to find out more about that organization’s mission and programs. The IRS Form 990, “Return of Organization Exempt From Income Tax,” can be thought of as the financial statements of a nonprofit organization. The form gives information about the organization’s finances and how money collected is spent.

Donors should keep in mind that although some groups may spend more on overhead than others, that does not necessarily disqualify a group from consideration. Larger nonprofits may have more expenses for outreach or large, multi-year projects. If donors have any concerns about how the money is being spent, they can contact the organization and ask them for more information (http://www.consumerismcommentary.com/3-things-you-need-to-know-before-giving-to-charity/)

Conclusion

Financial literacy is a key component of donor education.  To be effective, donors need to be knowledgeable about the details of their own financial situations, the ways in which strategic philanthropy can be economically beneficial to them in terms of tax exemption, what options exist for structuring their gifts, where their passions for giving lie, which organizations are both compatible with their values and also financially reliable and healthy, and the resources available to them for making wise choices.

 

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning.  She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about.  Annino recently released an updated version of her successful book, Women and Money: A Practical Guide to Estate Planning to include recent changes in the laws that govern how we protect our assets during and beyond our lifetime.  To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

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