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

www.guidestar.org.

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

Charities Division

1200 Bremer Tower

445 Minnesota Street

St. Paul, MN 55101-2130

651-296-3353

800-657-3787

www.ag.state.mn.us

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

www.smartgivers.org

Wise Giving Alliance Council of

Better Business Bureaus

4200 Wilson Boulevard, Suite 800

Arlington, VA 22203

703-276-0100

www.give.org

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