Here we are at the end of 2017, which means a lot of people are looking to make tax-deductible, charitable contributions to reduce their tax bills. If you're one of them, be sure to carefully research the organization you're considering. Check online resources such as GuideStar and Charity Navigator to start.
You should also ask a lot of questions before writing a check or clicking that "donate" button. Today, let’s review some of those.
1. Would your donation really be tax-deductible?
Just because an organization is a non-profit doesn't mean that your donation to it would necessarily be tax-deductible. You need to verify that it's a tax-exempt, non-profit organization under IRS regulations.
It might surprise you to learn that 501(c)3 groups — of which Episcopal Retirement Services, Deupree House's parent company, is one — are just one of 29 types of non-profits recognized under the United States Tax Code, and donations to many of those groups don't qualify for tax deduction.
And it gets even more complicated.
A certified non-profit is expressly prohibited from engaging in political advocacy for a candidate, or for policy. So, even though your local environmental protection group might be organized as a non-profit organization, if it engages in lobby work or works for a particular party or political candidate, donations to it are not deductible.
Some political advocacy organizations get around that requirement by having separately organized corporate arms for general education, which is allowable, and its advocacy operations, which aren't. You need to be sure that the arm you're donating to is engaged in allowable activity.
Another common pitfall: just because an organization operates as a non-profit, tax exempt status isn't automatically conferred. It must apply to the IRS for certification as such.
Full details are available on the IRS website — and they're definitely worth a close read. If in doubt, ask your tax attorney to research the potential eligibility of your deduction before you donate.
2. Is the organization engaged in fraudulent activity?
Everything might look OK on its website. The people you talk to may seem on the level. Everything appears to be on the up-and-up, but then a letter arrives from the IRS, questioning your deduction and advising you of an impending audit.
Or, worse, you wake up one day and find your bank account emptied.
There are a lot of con artists out there who will try to take advantage of seniors — especially around the holidays. Some will even appropriate a real non-profit's branded materials or email system to try to fool people.
Before you write a check or give out your credit card number, make sure that you (or your lawyer) has rigorously checked out the organization — and its purported soliciting agent.
If anything feels “off” at all, at any point in the conversation, don’t give in — hang up the phone. You can always take time to investigate. If you find out everything's on the level, the organization will always be happy to take your call later.
Never send banking information or personal information over email. Never “verify” information during a phone call or over email.
Look very critically at any organization (or person) that solicits a contribution from you. Arrange an appointment with the group's development director or executive director. Bring your tax attorney along.
You might even go so far as to ask your lawyer to interview its beneficiaries, to determine whether an organization does what it says it does. As the old journalist's maxim goes, if your mother says she loves you, the only way to be sure is to check it out with independent sources.
3. Am I acting impulsively?
Or, alternately, ask yourself, "Do I feel unduly pressured?"
You should never, ever donate out of a sense of urgent obligation. Many non-profit organizations — even reputable ones — will issue emotionally-charged, "urgent appeals" to their donor constituencies to meet their end-of-year development goals.
But you have time. In fact, you have all the way up to April 17, 2018, to make a tax-deductible charitable donation to reduce your 2017 federal tax obligation.
If an appeal suggests that you must contribute by any date sooner than that to realize a 2017 deduction, it's patently false.
Never act in the moment. Always impose a cooling off period on yourself. Sleep on it. Ask others for their advice. Talk to your attorney. Then make your donation.
Protect yourself: ask questions before you donate.
If you're a senior living in Cincinnati who's planning to make an end-of-year, tax-deductible contribution for 2017, ask the questions above before you donate. You might save yourself an audit — or protect yourself from being victimized.