With charities, it's better to be safe than sorry

May 06, 1994|By Andrew Leckey | Andrew Leckey,Tribune Media Services

It's a matter of trust.

Americans generously donate $124 billion to charities each year, not merely for a tax advantage but to do some real good.

However, overall confidence in nonprofit groups, damaged by some celebrated cases of extravagance or misuse of funds, has been on the wane. A Gallup poll found that more than one-half of 1,000 adult respondents believe charities have become less trustworthy during the past decade.

Everyone at one time or another has wondered whether money being contributed will wind up where it was intended. In some cases, a charity's goals may be of the highest order, but it may not be well-run.

Always know the nonprofit organization you're contributing to and how your dollars are used.

Various industry experts recommend that fund-raising and administration should constitute no more than 40 to 50 cents of each dollar raised. The rest should go directly to programs.

"A controversy in recent years has been that a number of charities categorize part of their expenses for direct mail or other appeals as 'program services' and 'educational tools,' rather than exclusively fund-raising," said Bennett Weiner, vice president with the Philanthropic Advisory Service of the Council of Better Business Bureaus.

"The accounting guidelines required for audit reports have been vague, so this makes it difficult to substantiate whether or not the charity has overallocated its finances toward fund-raising."

Middlemen can diminish the amount of money going to the cause.

"It's best to give your money directly to the charity, rather than to commercial fund-raisers, who can take a large percentage for themselves," advised Daniel Borochoff, president of the American Institute of Philanthropy, a watchdog group that rates charities. "Whenever you're asked to contribute, ask who's doing the asking, and, if it's an independent person, simply say 'No thanks' and instead give directly to the charity."

Coin canister collections are risky, Borochoff warns, because money may not make it back to the charity. Don't be bashful about contacting the charity to find out whether the person with the canister is receiving a cut of the money, or whether he's even affiliated with the charity.

Beware of crooks in 1994.

"The biggest charity scam involves 'telefunding' out of southern Nevada, in which people are informed by phone that they've won a new automobile, but must send a check for $800 in transportation charges in order to receive it," noted David Langan, an executive with the National Charities Information Bureau. "After they send the money, they're told the car will show up at a certain time at a certain place, and of course it never does."

In a number of cases, these same crooks operating in the name of charity will actually offer to trace the "lost" car for another $600.

Some points to consider in charitable giving:

* When solicited by telephone, ask that an annual report and financial statement be sent to you. Never give out your credit card number over the phone.

* Don't give in to pressure that you fork over money immediately. Always make your contribution with a check made out to the charity, not to the individual collector.

* Don't be fooled by names of charities that sound impressive, or that closely resemble names of more familiar organizations.

* If you are sent items you never ordered, such as key rings, seals or pens, you're under no obligation to pay or to return the merchandise.

* Beware of solicitations that tug on your heartstrings but give no explanation of the charity's actual programs or how they'll help solve the problem.

There are numerous publications available on charitable giving, including some that rate specific charitable organizations.

The American Institute of Philanthropy offers its "Charity Watchdog Report and Rating Guide," which rates 299 charities on a scale of A through F, for $3 by check. The address is 4579 Laclede Ave., Suite 136, St. Louis, Mo. 63108-2103.

The National Charities Information Bureau will provide a free copy of its "Wise Giving Guide," which evaluates charities, to those who send a self-addressed stamped envelope to Dept. 343, 19 Union Square West, New York, N.Y. 10003.

The Philanthropic Advisory Service of the Council of Better Business Bureaus offers, free of charge, the brochures "Tips on Charitable Giving" and "Standards for Charitable Solicitations."

The pamphlet "Give, But Give Wisely" for $2 lists charitable, educational and religious organizations that meet the group's standards on disclosure and use of funds. The $12.98 book "Annual Charity Index"

features descriptions of national charities. The address is 4200 Wilson Blvd., Arlington, Va. 22203.

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