Right now, with so much pain and suffering, the needs are dire. You want to do something to help. You also want your dollars to get in the hands of people most deserving.
Here’s what you need to know before donating to pandemic relief.
Do a little research
There are many new groups that are raising funds for a cause related to the current pandemic. “While they are doing good work, donations to these groups may not be tax deductible. If the tax deduction is important to you, make sure you ask the organization before you donate,” says David McKelvey, a tax-partner-in-charge at Friedman LLP in Uniondale.
Be sure, too, that the organization is legit. Many fake charitable causes and crowdfunding sites have been circulating since the COVID-19 pandemic hit. “Scammers are experts at tugging at our heartstrings, so we’ll empty our pockets. One red flag is someone claiming to represent a charity but intensely pressures you to donate,” says Leslie Tayne, a debt resolution attorney with the Tayne Law Group in Melville.
How to vet an organization
Check up on charitable organizations. The IRS maintains an online database of charitable organizations. Here you will find organizations that are registered as charities with the IRS (which means your donation will be tax deductible). The website is irs.gov/charities-non-profits/tax-exempt-organization-search. Then there are resources that provide data on nonprofit organizations, including ratings. Some to consider are the Better Business Bureau’s Wise Giving Alliance (give.org/for-donors), GuideStar (guidestar.org), Charity Navigator (charitynavigator.org) and Charity Watch (charitywatch.org).
What about crowdsourcing?
With no shortage of pleas from small business owners or others who have a GoFundMe campaign, do you say yes? “There are always risks in choosing to donate to a person or business that isn’t a registered charity. (Plus the donations won’t be tax deductible in most cases.) The biggest risk is that the person could be lying about their financial need or where the funds will go,” says Joshua Zimmelman, president of Westwood Tax & Consulting in Rockville Centre.
But that doesn’t mean it’s necessarily a bad idea. GoFundMe and similar sites use secure and encrypted payment technology, so your accounts are safe. Plus they carefully review campaigns and have estimated that less than one tenth of 1% of campaigns are fraudulent, says Zimmelman.
He suggests doing your research to decide whether or not to support a particular crowdfunding campaign. “Pay attention to who is organizing the campaign. If you want to support a local business that was shuttered due to the pandemic, the owner’s name is probably easily found on the company website.”
Do not make donations over the phone. “While the call may be from a legitimate organization, you really don’t know who is on the line, and they may be asking for critical financial information,” says McKelvey. If interested, ask for their website and then do your research. If you decide to donate via their website, protect yourself by using a credit card, not a debit card or providing check information, he adds.
Another no-no is clicking on links in emails or social media messages. “They might contain malware. If you receive an email or message about a charity you’d like to support, go directly to that charity’s official website instead of using the link in the message,” says Zimmelman.
Donations, taxes and time
You don’t always have to donate cash. “From a tax perspective, using appreciated securities held longer than one year can provide an additional tax benefit. Assuming you itemize deductions, you will receive a tax deduction of the fair market value of the security. In addition, you don’t have to pay tax on the appreciation above you cost basis [the amount they paid for the security],” says Matthew Rapoport, a senior wealth adviser with The Colony Group in Babylon.
Maybe you don’t have money to give but have free time. Says Zimmelman, “Many charities are likely short on volunteers. Contact local organizations to find out how you can best help without putting yourself at risk of contacting the virus. At the very least, you can share information and opportunities with others to help the charities that are important to you.”
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