Wednesday, 08 March 2017 18:57

Giving to Charities - Choosing a Cause With Care

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Choosing a Cause With Care

Prospective donors can find a suitable charity just about anywhere they look. However by doing some homework, you can better distinguish among the many giving opportunities available to you.

What Makes a Charity a Charity?

Generally, a charity is a tax-exempt organization that can receive tax-deductible contributions. To be recognized as a charity, most organizations must file an application with the IRS. Once approved, the IRS generally issues a determination letter confirming that the organization is tax exempt and that contributions to it are tax deductible for federal income tax purposes.

Mission Critical

While the IRS designation recognizes an organization's intent to operate in the best interest of a cause, it does not evaluate the effectiveness with which the organization pursues its mission. To be successful, a charity needs:

  • A mission statement/strategic plan: Does the organization's mission statement clearly state whom or what it serves and what it hopes to achieve -- and how it will execute its plan?
  • Financial statement/Form 990: This form provides a financial snapshot of the charity's fiscal strength. The IRS requires most tax-exempt organizations to file a Form 990 annually, although there are many exceptions. Individuals can request copies of a charity's Form 990 directly from the charity or view them online at Foundation Center and other websites.
  • Board of Trustees: The board oversees an organization's financial and legal responsibilities, manages its executives, and guides the vision that promotes the organization's cause.

Choose Carefully

While independent groups such as the BBB Wise Giving Alliance and GuideStar provide helpful information, it is ultimately up to you to judge whether a particular charity matches your giving objectives. Before choosing a charity, consider the organization's programs and whether they reflect its stated mission. Request copies of the organization's financial documents, including its annual report and a list of its board members. These should provide a clear view of the charity's operations and its management team. Also, spend some time browsing the charity's website to learn more about its activities, capital campaigns, and other unique features.

Most importantly -- Ask questions! For many nonprofits, the best way to evaluate their operations is to simply ask representatives about their mission, programs, financials, and board of trustees.

In charitable giving, information is critical. By taking time to research your choices, you can rest assured that your generosity will be put to good use.




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Lillian Appleby

Lillian Appleby, C(k)P, PPC, PFP

Lillian Appleby, C(k)P, PPC, PFP, is a managing director at Angeles Retirement Consulting, LLC and branch manager/registered principal at LPL Financial.  Lillian has been a licensed wealth manager and retirement planner since 1990.  Securities and advisory services are offered though LPL Financial, a Registered Investment Advisor.  Member FINRA/SIPC. For hyperlinks to FINRA and SIPC,www.finra.org and www.sipc.org.  Third party posts found on this profile do not reflect the views of LPL Financial and have not been reviewed by LPL Financial as to accuracy or completeness. For a list of states in which I am registered to do business, please visit www.lillianappleby.com

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