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Gifting from the Heart: A Concise Guide for Responsible
Donors Overview of Charitable Giving ·
Charitable giving has become very popular in the ·
In 2003, giving to charities rose 0.6 percent from
the 2002 levels (charity navigator online). ·
There are more than 4,000 charities licensed by the
Attorney General’s Charitable Trust Section (charity navigator online). ·
The truth is there are always disadvantaged people
that need the help of others generosity. ·
When someone is involved in a charity, or giving a
charitable donation we as a society recognize this as a kind and genuine act. ·
These acts are rewarded in many ways, some are
emotional and others are financial. ·
Emotionally, it feels good to help someone who is
less fortunate; it gives most people a sense of pride and accomplishment. Financial
Benefits of Charitable Giving Estate
Planning ·
A gift to a qualified charitable organization may
entitle you to a charitable contribution deduction against your income tax if
you itemize your deductions. ·
Reduce your estate taxes up to 55% (this is money
that your family might otherwise have to pay upon your death). ·
Families with Donative
Intent can meet their financial goals within an Estate Plan. Charitable
Planning ·
Use a Charitable Remainder Trust (CRT) as a
Discretionary Pension Plan ·
Increase retirement income with a NIMCRUT or Spigot
Trust. ·
Families with Donative
Intent can meet their financial goals within an Integrated Financial Plan. ·
Coordinate and control your Social Capital with a CRT
and Family Foundation or Donor Advised Funds by giving away the IRS’ money. Common Terms 501(c)(3): Organizations
described under 501 of the Internal Revenue Code public charities that are
tax-exempt and eligible to receive tax-deductible contributions. Their earnings do not benefit private
individuals, no substantial part of their activities should be used to
influence legislation, and they do not participate in political campaigns or
political endorsements. All charities
in our database are classified under 501 and file Federal Forms 990 with the
IRS. Administration
Expenses: This measure reflects what
percent of its total budget a charity spends on overhead, administrative
staff and associated costs, and organizational meetings. Dividing a charity’s administration
expenses by its total functional expenses yields this percentage. Assets: A charity’s assets include cash, savings,
investments, property, and other items of ownership with an exchange
value. By maintaining reserves of
assets, a charity is able to further advance its purposes and meet its
growing needs. CEO
Pay: The person identified as a
charity’s CEO is the individual employed full-time to lead the organization
on a day-to-day basis for the accounting period reflected by the charity’s
income statement. Charitable
Trust: Trust established for the
benefit of the public, usually setting a defined charitable purpose for an
undetermined number of beneficiaries. Contact
Information: This box displays an
organization’s address, phone and fax numbers, and web and e-mail
addresses. This is the most current
information available to the giving public, and may be pulled from that
organizations web site, stationery, annual report, or 990. Corporate
Foundation: A private foundation under
the tax law and derives its funds from a profit-making companies or
corporation. It is independently
constituted and its purpose is to make grants often on a broad basis. Corporate foundations should be distinguished
from “corporate giving programs,” which are administered within the
corporation. Excess
(or deficit); the difference between a charity’s total revenue and its total
expenses. Expenses: A charity’s expenses including spending on
such things as salaries, supplies, equipment, travel, and conferences. They can also include the value of donated
goods that a charity distributes. Form
990: For every fiscal year it is in
operation, a charity discloses it’s financial and programmatic information in
an annual federal return filed with the IRS.
Forms 990 are public documents.
By law, a copy of the forms must be supplied to anyone who requests
them. Most people use Forms 990 as the
primary source of information for evaluating charities. Foundation: A non-governmental, nonprofit organization,
with funds and programs managed by it’s own trustees or directors,
established to aid social, educational, charitable, religious, or other
activities serving the common welfare, primarily through the making of
grants. Corporate and community
foundations and charitable trusts are included. Income
Statement: All financial information
derives from the Federal Forms 990 filed by charities with the Internal
Revenue Service (IRS). This particular
statement shows the breakdown of a charity’s revenue and expenses, it’s
payments to affiliates, excess or deficit, and total net assets reported in
the most recent fiscal year. Liabilities:
The debt for which a charity is legally responsible. Liabilities include mortgages, loans, and
other items payable. Non-profit: A non-profit organization exists to serve a
societal or group mission, and does not pursue self-interest or pay out
profit to individuals. It is
recognized by the IRS as tax-exempt and eligible to receive tax-deductible
contributions. Most people use
non-profit and charity interchangeably. Primary
Revenue: The revenue a charity
generates as a result of the work it does.
A charity’s primary revenue includes grants and contributions, revenue
produced from programs and services, and membership fees and dues. Program
Expenses: This measure reflects what
percent of its total budget a charity spends on the programs and services it
exists to deliver. Dividing a charity’s program expenses by its total functional
expense yields this percentage. Revenue:
Charities can derive revenue or funding from a variety of sources, including
contributions, program services, membership dues, interest on savings,
investments income, special events, and sales of inventory. -An
Important part of giving is making sure your contribution is being used for
what you are donating it towards. It’s
a sad fact that many so called “charities” are nothing more than a scam, or
inefficient to the point where most of your contribution goes toward paying
staff and other basic needs. The
following are questions, warning signs, and a couple short lists that will
help make sure your donations are being put to good use. Questions to Ask Before Giving a
Charitable Donation 1. Get the exact name of the charity and the
fundraiser that is soliciting for the charity. 2. Ask the caller who is paying them. 3. Ask if the charity and the fund-raiser are
licensed with the Attorney General’s office. 4. Ask where and how your donation will be
used and what percentage of donations goes directly to carry out the
charitable purpose described by the solicitor. 5. Ask if your contribution will be tax
deductible. 6. Keep paper and pencil by the telephone to
write down the answers. Common Warning Signs for Bad
Charities 1. Bills or invoices sent to you even though
you never pledged money 2. A charity name that sounds or looks like a
widely recognized organization, but isn’t 3. A caller that insists on a pledge or
donations without first sending information 4. A caller who will not, or cannot, tell you
how the money will be used 5. Charities or fund raisers that use
emotional appeals without providing financial information to back up their
good work. 10 Inefficient Fundraisers (Charities that spend more than
$.50 to raise each dollar in support)
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