Follow Your Head as Well as Heart in Charitable Giving

The holiday season is prime time for charitable giving--both because people are in a generous mood and because making donations before year’s end can produce tax deductions.

This year the push to give should be even greater as Americans are bombarded with appeals from charities shut out in the wave of giving after the Sept. 11 terrorist attacks.

If you’re solicited by an unfamiliar charity, how do you know whether the group you’re helping is really helping out?

It’s an important question. There are about 800,000 nonprofit organizations in the U.S. Some of them disburse the vast majority of the donations they receive, but others spend a substantial amount of donated money on fund-raising and administration.

In addition, some have administrative policies that may enrich related for-profit corporations, unbeknownst to donors.

Many experts also believe that scam artists have been trying to take advantage of the charitable outpouring after the terrorist attacks by disguising themselves as philanthropies.

“It’s easy to get cynical, but it’s too important to just give up,” said Daniel Borochoff, president of the American Institute of Philanthropy. “The good news is, you don’t have to go it alone.”

Several organizations attempt to rate charities or provide donor information on the Internet. The information provided ranges from whether the charity is a registered nonprofit group to detailed analyses of a charity’s financial reports and activities.

The American Institute of Philanthropy rates 450 national nonprofit groups on a variety of standards, including what percentage of charitable dollars go to aid programs compared with administrative costs and how well the charity sticks to its stated mission.

Some of these ratings are listed on the AIP Web site at www.charitywatch.org. A more complete ranking is available for $3 shipping and handling from AIP at 4905 Del Ray Ave., Suite 300, Bethesda, MD 20814.

The AIP Web site also provides addresses and phone numbers for many national groups. If the specific information you’re looking for isn’t included, Borochoff suggests you call the charity.

The Better Business Bureau’s Wise Giving Alliance’s Web site at www.give.org lists about 300 charities that solicit contributions nationally. The site has full reports about what they do and whether they adhere to ethical fund-raising guidelines.

The Alliance also has a free magazine--the Wise Giving Guide. It can be requested over the Web, or via mail by writing to: BBB Wise Giving Guide, 4200 Wilson Blvd., Suite 800, Arlington, VA 22203.

Another Web-based resource is www.guidestar.org, which provides thumbnail sketches of virtually all nonprofit groups registered with the Internal Revenue Service.

The reports are not as comprehensive as the Better Business Bureau’s, but the site will link visitors to the charities’ own Web pages.

The site also allows you to view a charity’s 990 report--the detailed financial statement that must be filed with regulators each year.

These financial reports spell out the amount of money the organization received during the year, how much it spent, how much is in reserve and how it allocated its money.

This data are used by groups such as AIP when rating charities, but may be a bit overwhelming to anyone without a financial background.

The IRS also has a listing of every group that is a registered charity able to accept tax-deductible contributions. To go directly to the charity search prompt in the IRS’ massive Web site, type in www.irs.gov/search/eosearch.html.

Local Better Business Bureau offices also keep tabs on groups. While they can’t generally tell donors about each charity’s programs, these BBB offices would know if a locally operated charity has a complaint history.

Donors who have specific goals--perhaps to fund charities aimed at eradicating a particular problem or illness--can research charities by going to experts in that field.

If, for example, you want to give money to researchers fighting AIDS or Alzheimer’s disease, call medical professionals who work in those areas and ask what groups are doing the most good, Borochoff suggests.

Donors contemplating large contributions should consider volunteering their time in addition to their money--or at least personally visiting the organizations they support, said Patricia Nash Workman, spokeswoman for Independent Sector, a Washington-based coalition of nonprofit groups.

“Hard, cold numbers are a start, but they don’t tell you everything,” she said. “That’s why it’s very important to try to visit an organization and find out more about it.”

Independent Sector, which does regular surveys on charitable giving, has found that people who volunteer tend to give twice as much as those who don’t.

“The more you get personally connected, the better,” Workman said.

No matter what the circumstances, experts emphasize that donors should never feel pressured.

“If it’s not an area that you’re interested in, or it’s not the right time, or it’s not part of your giving plan, say no,” Workman said. “We also recommend that people develop a giving plan and be proactive about it. Don’t wait for the phone to ring or something to arrive in the mail.”