As 2010 winds to a close, many of you are celebrating, spending time with loved ones, perhaps considering your good fortune (and desiring to share it with those who've had less luck). Others are eyeing the start of fiscal year 2011 and preparing to balance the books--and do their good deeds for the taxman. Whatever your motivation, your intent is for your money to get to a place it’s needed.
But how do you make sure?
It’s pretty obvious that the guy sending you spam email, asking for your bank account information and promising you millions in profit for your assistance, is a scammer. But sometimes it’s not so simple--they have a great website, the glossy brochure looks official, and the stories seem touching. You just want to help.
If you’re in the US, and the charity is US-based or has an American arm, it’s pretty simple. Most non-profits file a Form 990 with the IRS. On this tax form, you can check out how much of the money the organization takes in goes back out--and where it goes when it leaves. If you see a great portion of the yearly intake going to fundraising or paying large executive salaries (for many these are itemized in the tax statement), you might stop and look around. Find an organization that does more, and spends less.
You can ask the organization for Form 990--or for their annual report, if they have one. Any organization that refuses to give you this information might be a bit fishy. You can also request the information from the IRS. Online they provide a basic search you can use to see if the organization is exempt and how much of your contribution to that organization is tax deductible. If you’re suspicious of a charity’s status? You can always check the IRS’s list of organizations whose tax-exempt status (501(c)) has been recently revoked.
But if you want more detail than that, the web--and our infinite interest in collecting transparent, publicly available data--provides it, quickly and easily. You can use the Foundation Center’s 990s Finder or any number of free or paid services to look up these public records. I used the Economic Research Institute to look up information on a charity I’ve supported in the past, Doctors without Borders. The ERI gave me a summary, with a clean graph showing revenue, assets, and contributions, and a listing of important data, like how the organization is classified, what area of work it does, and how it is organized. They also provide the link directly to Form 990, at no cost. (The paid portion of the search seems intended for legal or charitable professionals who want great detail or aggregate information about more detailed topics like compensation and practices.)
If the organization you’re contemplating donating to is based outside the United States, it might be a bit harder to dig up information--but it’s out there. The Grants Information Collection at the University of Wisconsin at Madison has a nice list of other websites that provide the same sort of information as the Foundation Center, for other countries. For example, you can look up charity organizations in the UK from a site like CharitiesDirect. Though most require a subscription or login for detailed information, the same basic info that you’d find in a US Form 990 is usually available with little hassle.
But there’s one way you’re always certain your donation--of money, of things, or simply of time and effort--hits just the right spot. It’s the same way that people make software better, or make the world around them better. They get involved locally, visibly. Find a local project--or a specific niche interest--and offer your assistance. You’ll get to see your effort have direct effect. It might not generate a deduction for the tax man, but the sense of satisfaction might be even better.
We’re curious--do your open source ways extend to your wallet? Do you feel that charitable giving is part of the open source way? Or unrelated? Discuss.
- Statistics from GrabStats, on American charitable giving
- Foundation Center fund finder
- The IRS does try to help out. You can check out this 2009 Tax Tips video on YouTube
- GiveWell top-rated international charities