That
an entity has been effectively organized, and recognized by the IRS as tax
exempt is no guarantee that it is being operated as a charitable entity. A good rule of thumb is that a charitable entity’s
general and administrative expenses should not exceed ten percent of its total
revenues.
We have more than passed the
half-way mark of the year 2013. And even though many charitable donors wait
until year-end to make their contributions, it is never too early to start evaluating
your charitable goals and the charities themselves.
To help prime the pump regarding
your charitable giving goals, consider two recent articles courtesy of Forbes.
The first article is titled “Give Your Property To Charity…” and
it deals with some real life (and largely football-based) examples to make the
case for charitable giving largely to the exclusion of leaving an inheritance
to your heirs. While that might be something of an extreme position for many,
it is not without merit for others. Regardless, whether you give a little each
year to charity or are intending to give it all to charity upon your passing,
there is good reason to do your due diligence.
Following on the heels of the
first article, the second is appropriately titled “…But Make Sure It's A Charity.” Fact:
not all charities are alike in form, even if they are all good at heart. In
reality, some charities can be less “charity” than advertised, either in terms
of their correct legal formation or in their bona fide charitable substance. If
you give to larger national charities, then this likely is less of an issue. On
the other hand, many smaller charities operate solely on the good will and
donated time of their volunteers. Consequently, these “mom and pop” charities
may not have been formed correctly or may operate in such a way as to threaten
any possibility of tax-favorable treatment.
Then again, bigger charities
cost money and many rely on professionals instead of volunteers. As a result,
these professionals soak up a higher and higher percentage of overhead, and
sometimes without demonstrable effect.
In short, there are many factors
to weigh when it comes to charitable giving. As these bookend Forbes articles illustrate, it is
important to examine both your own charitable goals and the charities
themselves before making gifts large or small.
For more information and articles on
estate planning and elder law topics, please visit our website
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Reference: Forbes (June
23, 2013) “Give Your Property To Charity…”
Forbes
(July 5, 2013) “…But Make Sure It's A Charity”