When the holiday season rolls around, people tend to give a little more to charitable causes than other times of the year, so naturally it’s also the time of year many charitable organizations are making that final push of the year to solicit donations. So how do we decide which charity is worthy of our hard earned money? How do we know we are giving to a legitimate organization that files their tax returns and complies with federal and state laws? How can we find out how much of our donation is actually going towards the actual cause we are supporting?
For large organizations, watchdogs like Charity Navigator do all the investigative work and rate each charity based upon how much money actually goes into their programs, what percentage of expenses are directly related to their charitable programs, and what they are spending on fund raising. A donor can visit their site and make an informed decision based upon their rating. Small, local charities are a different story, as you will not find them on Charity Navigator.
With over 27,000 nonprofit organizations in Massachusetts, choosing a charity that you support and that spends your donation responsibly can be a challenge. However, there are resources available to help anyone make an informed decision.
If you care where your donation is spent, and/or if you are looking to get that tax deduction, you need to do a little research. And while the 501(c)(3) tax exemption is critical for that tax deduction, it is Massachusetts Attorney General’s office [AG] that will have the information that may be more telling of their fiscal responsibility as a nonprofit.
The AG’s office is responsible for protecting the public’s and the benefactors’ interests by overseeing public charities. Other than an organization’s board of directors, there is no one else acting on behalf of the benefactors of a nonprofit. With registration and filing requirements for all public charities in the state, the AG’s newly updated website provides all the information you need to make an educated decision. The AG also issues an annual Certificate of Solicitation, only to those nonprofits have completed their initial registrations and file these two documents each year:
- Form PC/Annual Report – this will tell you by what means the charity is performing their fund raising (volunteers, staff, paid fund raisers, via internet, phone, raffles, etc), and how much money is paid to the fund raisers and other expenses and how much goes to the charity’s programs.
- IRS -990 – this is the charity’s annual tax return. If they are not filing their annual 990 with the AG’s office each year, it may be because they are not filing their tax returns with the IRS.
Once these filings are received, the AG’s office sends the nonprofit their certificate with an expiration date clearly noted on it. Without this document, a charity really shouldn’t be soliciting donations in Massachusetts. There could be a legitimate explanation why a charity does not have a valid, unexpired one; a change in their fiscal year end, a paperwork mix up, or an extension was granted. A quick phone call to the AG’s office could provide an answer, and help you decide whether that charity gets your donation. One year behind in the filings may be excusable. Anything beyond that should raise a red flag.
Professional fund raisers are also required to register with the Attorney General, and those reports are also available on their website. They are eye opening documents, and they reveal the sometimes absurd fees these professional fund raisers charge the charities they raise funds for.
According to a report on the AG’s site, a charity named Paralyzed Veterans of America New England Chapter, Inc. hired All Pro Productions to raise funds for them in 2016. They did a great job raising $751,117. Sadly, only $187,779 actually went to the paralyzed veterans. For every dollar raised, All Pro took 75% of that, giving paralyzed veterans only $0.25 for each dollar raised. Would the donors of the $751,117 have handed over that money knowing that fact? Take it a step further and ask the charity how much of that $.25 is eaten up in administrative costs.
To be a smart, informed donor you can do the following:
- Start by asking if they are a 501(c)(3) tax exempt charity, and get the tax ID number
- Ask for their Certificate of Solicitation from the AG’s office
- If solicited by a professional fund raiser, and ask how much of the donation goes to the charity.
- Document the contact information of the charity, and also that of the professional fund raiser if they use one.
- Use a credit card or check so you have documentation of the donation
- Don’t be afraid to say no to a solicitor. Be careful of the high pressure tactics to get a donation. It’s not a wise decision to make a donation over the phone.
- Make sure they are a real charity. Here’s a perfect example of why you need to:
You can donate your money any way you choose. It is a personal choice. They don’t have to be tax exempt or be a registered charity. It’s your money to do with what you please. But if you want to be sure your donation makes a difference, or you need that tax deduction, spend the extra time to do the research.
To reach the Attorney General’s Office Non-Profit Organizations/ Public Charities Division you can call (617) 963-2315.
You can look up a charity, view their annual report and their tax returns here: