Giving with caution: Ensuring your generosity counts

In the wake of global crises and natural disasters, the innate generosity of individuals often shines brightest, leading many to open their hearts and wallets to help those in need. The Internal Revenue Service (IRS), however, has issued a warning urging donors to exercise caution, as there are individuals and groups ready to exploit this generosity. Unfortunately, some charities are not what they appear to be, and donations made to these organizations do not reach the intended recipients, nor do they qualify for tax deductions.

As your trusted tax advisors, we emphasize the importance of verifying the legitimacy of charities before making a donation and urge donors not to feel pressured into giving on the spot, especially to organizations that are unfamiliar. The IRS provides a valuable resource in the Tax-Exempt Organization Search (TEOS) tool available here. This tool allows individuals to confirm the authenticity of a charity, check its eligibility for tax-deductible contributions, and access information about its tax-exempt status and filings.

When it comes to protecting yourself from charity scams, due diligence is key. Be skeptical of organizations that pressure you for immediate donations, and be particularly cautious if they ask for payment via gift cards or wire transfers. Legitimate charities will welcome contributions at any time and will have secure methods for accepting payments. It is also advisable to treat your personal information with the same care as your money, only sharing it when you are certain of the organization’s legitimacy. Remember, your contributions only count—both in terms of impact and tax deductions—if they go to a qualified, tax-exempt charity recognized by the IRS. Furthermore, the Federal Bureau of Investigation (FBI) also provides resources and information on Charity and Disaster Fraud, offering additional guidance on how to protect yourself from fraudulent schemes.