Clark Howard's Tips

Investigate charities thoroughly before giving them money

November 9, 2007

Clark works with a sales representative who is very charitable with his money. After being solicited by someone trying to collect money for firefighters, the sales rep agreed over the phone to give $25 to the cause. But when the pledge card arrived in the mail, there was a message stating it was not a charity and contributions were not tax deductible. The rep was in a classic moral dilemma; he wanted to honor his commitment, but no longer felt comfortable about it. Clark told him not to give the $25 in this instance.

With the holidays approaching, we're susceptible to being taken advantage of through our generosity. So anytime a solicitor calls seeking funds, your standard answer should be, "I don't give money out over the phone. If you'd like, you can send me some literature on your organization so I can make an informed decision."

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If you say that to a scammer, you'll probably hear Mr. Buzz -- the dial-tone -- because they'll be on to the next caller.

There's a grey area here with phony solicitors seeking money for fire departments, police departments and the military. Clark recently heard of one group raising money for soldiers. But it turned out only a third of 1 percent of the money was actually going to soldiers. That means 99.7 percent was being stolen from people like you with false promises.

You also need to beware of union-collection activities. Any contributions you make are not deductible and do not go directly to the benefit of fire or police workers. They instead go to union-funding efforts in law enforcement and public safety fields.

The bottom line is that you should have firsthand knowledge of any group you're considering funding. Many legitimate charities are inefficiently run, so only pennies may actually go to the intended recipient. Give your money instead to organizations you know you can trust and believe in. The best organizations for this are ones you're involved in yourself.

Clark has compiled some tips to help you know exactly how your charitable donations are being used.

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