TAX RETURNS!!! SQUEEEEEE!!!

I bet you can think of a hundred different ways to spend the automatic deposit or check that you’re getting from Uncle Sam, right? Are you saving it? Paying off some debt? Going on vacay?

Allow me to put a bug in your ear…Have you ever thought of giving some of it to a charitable organization?

I think a lot of us love the idea of giving back to a non-profit with either our time or our talent, but unfortunately the non-profit world is like the business world – you have to do your due diligence to make sure you are getting the most bang for your buck. Here are some simple tips to ensure your donation is going to a reputable organization, and that it’s not being wasted:

  1. Is the charity a 501(c)3? In order for your donation to be tax-deductible, it has to be registered as a 501(c)3, which is the IRS’ non-profit code. Go to IRS.gov to determine if the charity you want to donate to has this tax-exempt status.
  1. Examine the charity’s annual report. If the non-profit is truly transparent, they will have their annual report either on their website or will readily send it to you. If they have pie charts or bar graphs, you can literally see where the cash is going. If they are hemorrhaging money, that’s a bad sign. If they rely too heavily on volatile grants, that can be another red flag.
  1. Read the organization’s 990. The 990 is the non-profit equivalent of a 1040 that they file every year. This is where you find the real dirt. FoundationCenter.org is hands down the best place on the Internet to find out where the non-profit *really* spends their money. For example, the Los Angeles Opera Company spent $35 million in its 2014 filing. The famous opera tenor Placido Domingo made over $900,000 for being their general director, and the form even indicated he sometimes used first-class travel for “business purposes.”

The famous opera tenor Placido Domingo made over $900,000 for being their general director, and the form even indicated he sometimes used first-class travel for “business purposes.”

Wait, what?!

  1. Determine what percentage of their budget directly impacts programs. Continuing with the example of the LA Opera company, their 990 shows that $3.5 million went to the top eleven salaries. That’s equivalent to 10% of their operating budget. That’s a big percentage for such a small portion of their staff. I wonder what they pay their musicians…?

This isn’t an exact science, because of course non-profits’ biggest expenses are salaries. And people who work there deserve to make a living they are often hardworking and very underpaid.

But is an appropriate amount going to programs in the community? Are they making an impact among people you know or have heard about? Can the non-profit give you evidence of its footprint with statistics and press packets? Because if they can’t, something is probably fishy.

  1. Consider an in-kind donation. Give an old bridesmaids dress to a charity that provides prom dresses to those who can’t afford it. Donate books to a literacy center, or gently used toys to a shelter that takes in families. Or offer a donation to a silent auction fundraiser. That way you know your items go directly to support the organization’s mission, and receive a donation form come tax season.
  1. Or, better yet, give your time. Money is great, but time is even better. Play with shelter kitties. Cook a meal for soup kitchen. Pick up trash along a bike path. Do Meals on Wheels. There are hundreds of ways to donate your time and get some real skin in the game. Nothing will show your passion for an organization like the time you spend there. 

What non-profit is nearest and dearest to your heart? Comment below!