may2021 - 6

FEATURE
Due Diligence is Critical in
Charitable Donations
MOST AMERICANS MAKE the majority of their donations to
charitable organizations at year end. But whether the donation
is made in April or October, the same due diligence should be
performed.
If your clients are struggling
with providing you with the correct
documentation for their donations,
or
they're giving to organizations
that are not properly vetted, here are
a few things they can do to make your
life easier and ensure that they get
the proper credit for their charitable
donations.
* Check the organizat ion's 501(c)
(3) status. There are other types of
organizations that accept contributions
and allow donors to take a deduction,
but they vary, depending on the type
of organization.
* Always get a receipt; particularly if a
donation is more than $250.00. Donors
should not have to ask for a receipt -
they should be automatically provided.
However, a nonprofit organization is
required to provide those making a
donation in excess of $250 a receipt.
* Make sure they are a legitimate organization.
This is particularly important
when giving to an organization for the
first time. Quite frankly, there are a ton
of organizations out there, all trying to
obtain a donor's hard-earned dollars.
Your clients should always take a few
minutes to do some checking to make
sure that the organization is actually
performing the work they say they are
By Mary Girsch-Bock
before making any contribution.
* Is the organization transparent? Is
there information on how donations
are used? Is there an adequate amount
of money going directly towards
programs? It's important to remember
that most nonprofit organizations
wouldn't exist without staff members
providing their expertise, managing
programs or handling finances. That
said, if overhead is the only thing currently
being funded, your clients should
give their hard-earned dollars to a
more deserving organization. For more
detailed information on any nonprofit,
your client can visit GuideStar, Give,
or Charity.org, where they can view
detailed financial information on the
organization in question, including
prior year 990s.
* If your clients are planning on taking a
tax deduction for their donation, they
must ensure that it's in the hands of
the organization on December 31st, or
they'll have to wait until next year to
take that deduction.
* Remind your clients that there are
other ways to support their favorite
nonprofit, including donating stocks
and bonds, or making a charitable
bequest to the organization. Prior to
doing one of the above, they should
speak to the organization to be sure
that they're equipped to handle these
alternative donation methods.
If your clients spend a little time
vetting an organization prior to giving,
handling their charitable giving
at year end becomes a much easier
proposition. ■
6 MAY 2021 ■ www.CPAPracticeAdvisor.com
http://www.Charity.org http://www.CPAPracticeAdvisor.com
may2021

Table of Contents for the Digital Edition of may2021
