[Hpn] Not all charities are legitimate

chance martin streetsheet@sf-homeless-coalition.org
Sat, 23 Dec 2000 15:05:00 -0700


Published Saturday, Dec. 16, 2000, in the San Jose Mercury News

Not all charities are legitimate
Dallas Morning News

Stuffed amid the Christmas catalogs in your mailbox this time of year is
likely to be an appeal from a charity.

After all, the season revives the spirit of giving. Unfortunately, it also
brings forth the deceptive intent of others who prey on your generosity.

``There are so many scams out there, and this is the time of the year for
them,'' said Tom Riley, director of research at the Philanthropy Roundtable
in Washington, D.C., a national association of individual donors, corporate
giving representatives and others in the charities business. ``People feel a
lot more generous. You're used to being hit up this time of year.''

To protect yourself, do some homework. Treat a donation as you would an
investment, where you have the rights to information.

The most important rule is to find out who's really getting the money.
Sometimes, charities sound like the one you want to give to -- but they're
not. It happens very often with organizations that have ``Cancer'' or
``Heart'' in their names, said Jeannette Kopko, senior vice president of the
Better Business Bureau of Metropolitan Dallas.

You should understand the charity's activity. You should also ask for
written materials that include the charity's annual report.

Look at the board of directors for recognizable names, which give
credibility. If you recognize the names of people you know, call them to ask
about the charity's activities. Visit the charity yourself.

An appeal with a vague description of the charity raises a red flag.

``If they say they are helping the homeless, how are they helping them?''
said Bennett Weiner, director of the Council of Better Business Bureaus'
Philanthropic Advisory Service in Arlington, Va. ``Through food? Through
shelter? Through medical assistance, vocational training? And where is that
assistance taking place? These are facts that should be prominent in the

Ensure that the charity is a tax-exempt organization registered with the
Internal Revenue Service. Those groups also are known as 501(3)
organizations, and donations to them are tax-deductible.

Consumers may check on the tax-exempt status of an organization by going to
IRS Web page www.irs.gov/bus_info/eo/index.html. Or they can ask their
library if it carries IRS Publication 78, also known as the Cumulative List
of Organizations, which lists entities with tax-exempt status.

A key document to obtain is the charity's IRS Form 990, which tax-exempt
organizations file each year with the IRS. Religious institutions, such as
churches, and certain church-affiliated charities aren't required to file a
990 form.

Organizations that do file a 990 form are required to provide a copy of the
form to anyone who requests it.

The form, also known as Return of Organization Exempt From Income Tax, is a
gold mine of information on a charity.

It lists the organization's officers, directors, trustees and key employees.
It also provides information on revenue, expenses, changes in net assets or
fund balances, and balance sheets of an organization.

So take a look at how much money is going to charitable activities vs.
administrative expenses. You can find that information in the ``Expenses''
column of the 990 form. At least 50 percent of an organization's expenses
should be program expenses.

Consumers should be wary of appeals from charities that ``make you cry
instead of think,'' Weiner said. If a charity applies heavy pressure on you
to write a check, be skeptical.

``The charity that wants your money today will welcome it next week, next
month, just as well,'' Weiner said. ``Don't be pressured to make an
on-the-spot gift.''

If consumers get a pitch through the telephone, they shouldn't make an
immediate financial commitment, experts say. Ask the solicitor if he or she
is an employee of the charity or an employee of a telemarketing firm.

Many organizations hire a telemarketer to raise money for them, and the
telemarketer often gets a huge cut of the take. You should ask a solicitor
what percentage the telemarketing firm will get of the proceeds raised.

Use even more precautions for giving online. The best way is through a
charity's own Web site. If you use a ``philanthropy portal'' that lists
charities and provides the technical means for donations to them, understand
that some portals are non-profits and others for profit. Portals make money
by selling ads or sponsorships, taking a percentage of the online gift or
deducting from the gift the credit card transaction fee, usually around 3

 2000 The Mercury News.


**In accordance with Title 17 U.S.C. section 107,
this material is distributed without charge or profit
to those who have expressed a prior
interest in receiving this type of information for
non-profit research and educational purposes only.**

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