First, check an organization's eligibility status. It's common knowledge that tax deductions can make charitable giving a win-win for donors and recipients. However, a few things have to be taken into consideration before you write a check to any old charity, no matter how deserving you think its cause to be. Not every type of gift is tax-deductible and not every well-meaning organization knows how to put your money to work.
"There are scams, there are great nonprofits, and there's a lot in the middle. There's just some that deserve the money more than other," says Lindsay Nichols, spokeswoman for GuideStar.
The first thing to determine is if, in fact, the charity of your choice is eligible for tax-deductible gifts. This question is especially pertinent because in June 2011 the Internal Revenue Service revoked the nonprofit status of 275,000 organizations. The mass revocation resulted from a 2006 law that requires nonprofits to file with the IRS for three consecutive years, and many smaller organizations without permanent accountants didn't make the cut.
"You may assume you are giving to an organization that has been operating for some time, but they aren't actually a nonprofit and you can't deduct it from your taxes," says Lindsay Nichols, spokeswoman for GuideStar, a nonprofit that promotes transparency in philanthropy. It is important to find out if the philanthropic organization qualifies as a non-profit. One place to check is the Better Business Bureau, or IRS.gov which has information on charities and non-profits.