During the holiday season, charities step up their year-end appeals to raise money. While it's wonderful to support these organizations, it's important to guard against potential scams, especially if you get a request from an unfamiliar group.
The first step is to confirm the group's name to determine if the charity is legitimate. Even if it is a genuine nonprofit, there could be a case of mistaken identity. There are hundreds of organizations devoted to children and cancer, so go to the group's website to see how it spends its money.
You also can see what others say about the organization by going to the Better Business Bureau's BBB Wise Giving Alliance (give.org), Charity Navigator (charitynavigator.org), Charity Watch (charitywatch.org), and GuideStar (guidestar.org).
The Federal Trade Commission recommends you just say no to any solicitation if the representative asks for money but:
REFUSES TO GIVE YOU FULL DETAILS about the group's identity, mission, costs and how it will use your donation.
USES HIGH-PRESSURE TACTICS like trying to get you to donate immediately, before you can do research or think it over.
ASKS YOU TO SEND CASH or use a money transfer.
OFFERS TO SEND A COURIER or overnight delivery service to collect the donation immediately.
PROMISES TO ENTER YOU IN A SWEEPSTAKES or give you a prize for donating.
WON'T PROVIDE PROOF that your contribution is tax deductible.
USES A NAME that closely resembles a better-known, reputable organization.
THANKS YOU FOR A PLEDGE you don't remember making.
Some scammers focus on specific causes to play on your generosity. Rip-off artists often focus on emotional appeals or disasters in the news.
The Federal Trade Commission notes an increase of fraudulent charitable solicitations for veterans and military families, as well as calls on behalf of police and firefighters. In both cases, ask for identification, how your contribution will be used and if your contribution is tax-deductible.
If you are unsure, call the organization to verify a fundraiser's claim that he or she is collecting on behalf of the group.
If you think you've been the victim of a charity scam or if a fundraiser has violated Do Not Call rules, file a complaint with the Federal Trade Commission (nwsdy.li/complaint). Your complaints can help detect patterns of wrongdoing and may lead to investigations and prosecutions.
If all seems legit, then it's time to see whether the organization is efficient, ethical and effective. Charity Navigator provides a zero- to four-star rating system, which includes a review of each charity's fiscal performance. The site also helps you understand what portion of your donation goes to support overhead or administrative costs, versus how much goes to the cause itself.
If the donation qualifies, and if you itemize your tax deductions, charitable contributions made to qualified organizations may help lower your tax bill. See IRS Publication 526 (nwsdy.li/526charity) for rules on what constitutes a qualified organization.
You have until Dec. 31 to make your donations if you plan to deduct them on your 2014 tax return. Before you get too excited about that deduction, you should know the difference between "tax exempt" and "tax deductible." Tax-exempt means the organization doesn't have to pay taxes. Tax deductible means you can deduct your contribution on your federal income tax return. You can check an organization's tax status at nwsdy.li/taxstatus.
To claim the charitable deduction, make sure you maintain a bank record, payroll deduction record or a written communication from the organization containing the name of the organization, the date of the contribution and amount of the contribution.
For text message donations, a telephone bill will meet the record-keeping requirement if it shows the name of the receiving organization, the date of the contribution and the amount given.
Being charitable is wonderful, but make sure the organization is real and that its mission is aligned with your personal goals.
Jill Schlesinger, a certified financial planner, is a CBS News business analyst. She welcomes emailed comments and questions.