About Donations
for Nonprofits
Nonprofit organizations rely heavily on donations to fund their work. Because there are so many worthy causes, it can be overwhelming deciding which organizations should receive your support. By thoroughly investigating each charity, you can be assured that you are selecting an organization that does work you admire in a fiscally responsible way.
Identification
Nonprofit organizations perform charitable work and apply all monies received to the work of the organization. Medical and educational charities, animal shelters, arts programs and homeless shelters are commonly run as nonprofit organizations. These organizations receive all or most of their operating budgets from donations.
Types
There are several types of nonprofit donations. Cash gifts are one of the most popular types of donation and many nonprofits now offer donation buttons on their websites to make it easier for donors to give. In-kind donations are gifts of an item to be used for the benefit of the no-profit. In-kind donations include such items as computers or books or the gift of professional services, such as legal or accounting work. A bequest is a provision in your will designating that a property or certain amount on money or stocks will be given to a nonprofit upon your death. Grants are typically awarded by foundations to nonprofit organizations meeting certain criteria and support is usually limited to one or two years. Fundraisers allow nonprofits to raise money during an event, such as a dance or golf tournament. While a certain percentage of the proceeds must go to pay the costs incurred in holding the event, the remainder of the money is used as a donation by the organization.
Features
Charity Navigator, an organization devoted to evaluating the fund-raising practices of nonprofits, suggests that donors complete thorough research before deciding to donate to a particular nonprofit. Charity Navigator provides a description of all U.S. non-profits that have received a 501(c)(3), or tax-exempt, designation from the government. These charities are evaluated on ratio of program expenses to administrative and fund-raising expenses, the percentage of assets devoted to operating costs, organizational efficiency and the amount of assets and revenue.
Considerations
Nonprofit organizations should be able to produce a copy of their 501(c)(3) certificates, if asked, and should make their financial records available to donors. Ask to see Form 990, which is the organization's federal tax return, for the last several years. Carefully look at the amounts that the non-profit spent on fund-raising and administrative costs, including salaries. A well run organization will spend no more than 25 percent on administrative and fund-raising costs. If you itemize deductions on your tax return, you may be able to deduct charitable gifts. Gifts are deductible in the year in which they are made. You can also claim a deduction for in-kind donations of property or goods and may be able to claim the fair market value of the property.
Warning
Avoid organizations that claim to be fund-raising on behalf of another organization. In some cases, this is a scam and in others, the fund-raising company is taking a significant percent of the amount raised, giving relatively little to the charity. It is best to donate to a non-profit organization directly.
Tags: Nonprofit organizations, About Donations, About Donations Nonprofits, administrative fund-raising, Charity Navigator, Donations Nonprofits, In-kind donations