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How to Vet a Charity in the Season of Giving

Hurricanes, wildfires, and a global pandemic are some of the events in 2020 that have increased the need for charitable donations. And to encourage giving, Congress created tax incentives available only for 2020 donations. You can now deduct up to $300 in cash donations made to charity even if you don't file an itemized tax return. Itemizers can deduct cash donations of up to 100% of their adjusted gross income, up from the usual 60%.

With more than 1.5 million charitable organizations in the United States alone, it can be overwhelming deciding where to donate. On top of that, many scammers use bogus charities to trick donors out of their money during the year-end giving season.

Before you give, review these tips to find and vet a charity:

Consider causes you want to support. For example, do you want to help health care workers on the frontline of the pandemic, foodbanks that are feeding the unemployed, or communities affected by the wildfires? Would you prefer to see your dollars at work in your community or assisting groups nationally or internationally?

If you're unsure which organizations engage in issues you care about, search charities by topic at Charity Navigator, which evaluates charities.

Do your research. Once you've narrowed your choice of nonprofits, it's time to check them out.

Start by visiting the charities' websites for information on their mission and programs. Then look for  more details at Charity Navigator, the BBB Wise Giving Alliance, CharityWatch, and GiveWell. These sites rate nonprofits on their effectiveness, transparency, financial health, and other factors. For example, CharityWatch's top-rated charities spend at least 75% of their budgets on charitable programs.

Check with regulators. Most states require a charity to register with them before soliciting residents for contributions. Check with your state to see if the charity is registered, if required.

Not all tax-exempt organizations qualify for tax-deductible donations. Use the Internal Revenue Service's Tax Exempt Organization Search tool to verify that the organization is a charity and your donation will be tax deductible.

Watch for red flags. Many con artists solicit donations for bogus charities with names similar to those of legitimate nonprofits. To uncover such schemes, the Federal Trade Commission recommends searching a charity's name online along with the words "scam," "fraud," or "complaint."

Other scammer tactics to avoid? Being pressured by telemarketers to donate on the spot and having organizations ask you to donate by wiring money or with gift cards. For security and recordkeeping, always donate by check or credit card.

Check out these additional fraud prevention tips and ICMA-RC's Security Guarantee.

Please note: The contents of this publication provided by ICMA-RC is general information regarding your retirement benefits. It is not intended to provide you with or substitute for specific legal, tax, or investment advice. You may want to consult with your legal, tax, or investment adviser to review your own personal situation. Some of the products, services, or funds detailed in this publication may not be available in your plan. This document contains information obtained from outside sources and it references external websites. While we believe this information to be reliable, we cannot guarantee its complete accuracy. In addition, rules and laws can change frequently.

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