Your Legal Rights: Charitable giving during the holidays
Editor's note: The following is a "Your Legal Rights" column provided by the Office of Minnesota Attorney General Lori Swanson.
With the holidays upon us and the end of the tax year approaching, many Minnesotans are thinking about making year-end charitable contributions. The holiday season is also a time for generosity and giving, as many look to help the less fortunate through charitable donations.
This column is designed to provide you with information that will help you navigate charitable giving during the holiday season.
SORTING THROUGH THE SOLICITATION
The changing times and technology have impacted the methods charities use to ask for
donations. No longer are charitable solicitations limited to telephone calls, mailings, e-
mail pleas, and red kettles. Some donors are looking for more convenient ways to give, and
technology has helped nonprofit organizations accommodate that demand. Donors may now
find that they are asked to give at retail cash registers, ATMs, via text messages, and through
social networking websites. As you contemplate whether to respond to these solicitations, here
are some issues to consider:
Are fees assessed? While in some cases vendors may waive fees for charitable donations,
others may charge hefty fees to the donor and/or charity for the convenience of using those
tools. If fees are not disclosed, you should check whether you or the charity will be charged
extra fees for making donations through an ATM, text message or other such means.
Will your donation go to the charity? While technology may offer convenience, it also
opens the door to fraud. For example, you may be asked to give to a cause via text message,
but the organization may not be reputable or the number you are asked to enter may be
fraudulent. To make sure your donation is going where it is supposed to, take the time to
make sure the charity is valid and that your donation was received.
Has the charity or retailer been vetted? Many are asked to donate to a charity while
making a purchase. Donors give, trusting that the retailer has done its research and is
requesting funds on behalf of a reputable charity. Donors should feel free to seek more
information about the arrangement and confirm whether the retailer has done its research
about the charity. Donors should also feel free to contact the charity directly to make sure
the retailer is forwarding donations as promised.
How well do you know the charity? Studies show that donors are more likely to give
when asked by a friend. Charities know this, and many have started campaigns using social
networking tools to raise funds. Some charities send fund-raising kits to donors, asking them
to solicit their neighbors for donations. Others have started Facebook pages to encourage
giving through social network. Oftentimes, however, these are "pass it on" requests and
organizations are not necessarily vetted or researched when the request is made. As with
any solicitation, even when forwarded from a friend, you should research and ask all the
important questions (as described below) about the charity to ensure your dollars are going
where they should.
Will your privacy be secure? Giving through convenient tools may mean your donating
habits are easier to detect. If you are concerned about your privacy, check to see if your
information is harvested and shared by those offering the convenience.
MAKE YOURSELF AN INFORMED DONOR
No matter the form of the solicitation, donors should research a charity before giving. This is not
always easy when asked to give a dollar here or five dollars there over the course of the holiday
season. But the best way to make sure your charitable dollars are going where you wish is to
research the organization before giving. You may wish to seek the following information before
responding to a solicitation:
Find out what the charity will do with your gift and ask about the types of programs your
gift will support, and how the charity will use your gift to achieve its stated purposes.
Find out if the solicitation is being made by a "professional fund-raiser," and if so,
ask how much of your donation is being used to pay the professional fund-raiser. Some
professional fund-raisers retain as much as 90% of your donation.
Find out how much of the donation will actually be used to support the charity's
program as opposed to fund-raising and administrative expenses. If you don't ask, you may
not find out that the majority of your donation may be used for overhead.
Ask whether the organization is a 501(c)(3) tax-exempt organization, which will affect
whether your donation is tax-deductible.
If the solicitation is made by a third party, such as a retailer, ask about the arrangement
with the charity. How does the retailer account for the donated funds? How does it ensure
that all funds are properly forwarded to the charity? Is there a maximum amount the retailer
will forward to the charity? Has the charity been researched?
Find out if the charity is registered with the Minnesota Attorney General's Office to
solicit so that you may independently review the organization.
To independently research a charity, donors may access certain public information about the
charity. Financial information about organizations registered to solicit charitable contributions
in Minnesota may be obtained from public information on file with the Minnesota Attorney
General's Office. Each charity that is registered to solicit contributions in Minnesota files its
annual federal tax return--the IRS Form 990 or 990 EZ--with the Attorney General's Office
(larger organizations with over $750,000 per year in revenue are also required to file audited
financial statements). The IRS Form 990 has information about how much a charity has raised
in contributions during its fiscal year, and how much it has paid out in salaries, overhead, fund-
raising expenses, and program services. To view actual copies of a charity's annual filings,
you may visit the Attorney General's Office's public file room located on the 12th floor of the
Bremer Tower at 445 Minnesota Street in downtown Saint Paul. Certain summary information
from the IRS Form 990s on file with the Minnesota Attorney General's Office is available
through the Attorney General's Office's website at www.ag.state.mn.us. A company called
GuideStar makes actual copies of the federal tax returns filed by charities, the IRS Form 990,
available over the Internet. You may view a charity's IRS Form 990 at the GuideStar website at
WHERE CAN I GET MORE INFORMATION OR FILE COMPLAINTS?
If you have questions about a charitable organization or fund-raiser or if you wish to file a
complaint about an organization that has solicited you for a contribution, contact the Attorney
General's Office Charities Division at:
Minnesota Attorney General's Office
1200 Bremer Tower
445 Minnesota Street
St. Paul, MN 55101-2130
Finally, several private agencies evaluate charities. The following private agencies monitor the
activities of charities, establish guidelines which they believe charities should meet, and provide
ratings of different charities:
Charities Review Council
2610 University Avenue West, Suite 375
St. Paul, MN 55114-2007
651-224-7030 or 800-733-4483
Wise Giving Alliance Council of
Better Business Bureaus
4200 Wilson Boulevard, Suite 800
Arlington, VA 22203