Within hours of the devastationcaused by Katrina, Websites had sprung up encouragingpeople to show their support bygiving money online to various charitiespurporting to help victims. But were allof these charities legitimate?
To be considered a charity in the eyesof the IRS, an organization must obtaina tax-exemption status letter. Would acharity be able to obtain such a documentwithin hours? Not likely. In addition,donors should try to determinehow much of each dollar they give actuallymakes it into the hands of those theyare trying to support with their gifts.
Fortunately, there are ways in whichdonors can find answers. First, a charityis required to file a tax return with theIRS called Form 990. You can ask thecharity to provide you with both a copyof Form 990 and a copy of the charity'smost recent annual report. These twodocuments will show you how the charityspends its money. If the charity hesitatesto send what you request, beware.
Second, in its Publication 78 (http://apps.irs.gov/app/pub78), the IRS listseach charity that has obtained the necessarytax-exemption letter. In addition,check with US government resources inregard to specific disaster relief efforts.For example, if you wish to help thoseaffected by a recent hurricane, reviewthe US government's official Web site atwww.firstgov.gov, which identifies existingcharities currently working on hurricanerelief efforts and provides informationon how you can help.
The bottom line is that anyone canpurport to be a charity and offer you theopportunity to give when tragedystrikes—but you as the donor mustmake sure that the charity to which youare giving is legitimate. Otherwise, yourgood deed will do no good. The followingis a list of Web sites that will help youfind a reputable charity:
•The Better Business Bureau (www.bbb.org) provides detailed informationon a long list of charities through itsWise Giving Alliance (www.give.org),which provides links to state governmentoffices to find out if a specificcharity is registered.
•Action Without Borders (www.idealist.org) lists over 49,000 nonprofitand community opportunities in 165countries, with links to individual charitiesand information about career andvolunteer opportunities.
•NetworkForGood.com reveals financialinformation about charities sothat you can see where money goesand how efficiently it uses donations.You can also set up a profile thattracks your donation history.
Laurie Rivard is a partner and financial principal at Lowry Hill,
a 20-year-old comprehensive, private wealth management
firm providing multifamily office services to more than 300
families across the United States from its offices in
Minneapolis, Minn, Naples, Fla, and Scottsdale, Ariz. She
holds a bachelor's degree in accounting, a master's degree
in business taxation, and is a CPA. Prospective clients wish to
invest at least $10 million. Ms. Rivard welcomes questions or
comments at email@example.com.