A Closer Look At Charitable California Donation

Persuasions to donate to a charitable cause can easily tug at your heartstrings. In most cases, your generous donations will be used for great causes, however, there are exceptions. Giving Center, an IRS registered 501 © (3) nonprofit organization, would like to remind donors that it is important to take the time to learn more about the charity you will be donating to, its programs or missions, and how your contributions will be used.

California accounts for nearly one-eighth of all registered charities in the United States. Currently, there are more than 90,000 charities registered in the golden state, making it an important sector of the economy. Some nonprofit organizations receive grants from the government, but more than 80% of the money received by charities comes from individual donors.

In California, the term “charity” is applied to tax-exempt, nonprofit public benefit corporations. These organizations have been granted federal and state tax exemptions, has registered to do business in California and is registered with the Attorney General’s Registry of Charitable Trusts (Registry). This means:

• Exemption from both federal and state taxes. Charitable organizations typically are exempted from tax under the IRS Code section 501(c)(3) and California Revenue and Taxation Code section 23701(d). For this tax exemption, a charity must be operated exclusively for religious, charitable, scientific, and testing for public safety, literary, or educational purposes. Tax laws allow donations to 501(c )(3) organizations to become tax deductions for that same tax year.
• Registered to do business in California. Charities are usually incorporated as public benefit corporations through the Secretary of State. If they are incorporated in another state, they must register with the Secretary of State in order to be able to accept donations in California. You are able to check the status of a charity in California on the Secretary of State web site http://www.ss.ca.gov/business/corp/corporate.htm
• Registered with the Attorney General’s Registry of Charitable Trusts. A charity has to register within 30 days after receiving any type of donated contributions. The Attorney General’s web site has a helpful searchable database of currently registered charities.

Here are some important things to consider before making a donation:

1. Getting involved with charities in your community and supporting their programs. Working with local charities helps provide first-hand knowledge about its programs and the ways they benefit the community. Be sure to ask about the specific ways a charity is benefiting those in need.
2. If you are being solicited by a charity, learn about the organization, its activities, and fundraising practices before making a donation.
3. Ask if the solicitor is working for a commercial fundraiser and if they are being paid to solicit. By law, the commercial fundraiser must tell you that the solicitation is being conducted by a commercial fundraiser. They must also tell you the name the fundraiser is registered with.
4. Ask what percentage of the donations/proceeds being raised is paying for the fundraising expenses.
5. Ask how your donation will be used for the programs you want to support and how much will cover the charity’s administrative/fundraising costs. Charities do not have a set requirement that limits the percentage of revenue that can be spent on fundraising or administrative costs.
6. Ask for the charity’s name, address, telephone number, and proof of exempt status.
7. Be wary. If being solicited, be sure to call the charity directly. If the charity has not given permission to solicitors to use its name, you may be dealing with a fraudulent solicitor.
8. Watch out for questionable organizations with copycat or similar sounding names.
9. Know the difference between “tax-exempt” and “tax-deductible.” Charitable donations made to tax-exempt organizations do not always mean the donation is tax-deductible. Tax-exempt status simply means the organization does not have to pay federal taxes. For example, political campaign committees and membership organizations can be tax-exempt under Internal Revenue Code section 501(c) (4), they do not pay income taxes, however, donations to these types of organizations do not mean tax deductions for you. You may only receive a tax-deduction when making donations to charities or organizations formed under section 501(c)(3) of the Internal Revenue Code.
10. Avoid cash donations. Instead of giving a cash donation to charity, write out a check. Remember to use the full name of the charity, rather than initials or abbreviations
11. Do not give out your credit card information to telephone solicitors.
12. Be cautious of high-pressure solicitors. Do not fill like you have to make a donation if you feel uncomfortable about the pitch or you feel like you are being threatened. Any responsible charities or fundraisers will not pressure a donor to make a donation on the spot. Immediately report any threatening solicitation to the consumer fraud division of your local district attorney's office or law enforcement agency.
13. Think about the cost when purchasing tickets or merchandise to a “fundraising” event, or when receiving free goods in exchange for a charitable donation. Although sales may be an effective fundraising tool when used by charities, they usually result in less money for the charity than nonsales solicitation. Furthermore, goods and services received for donations are not tax-deductible for donors.
14. Charities that have gross receipts of $25,000 or more must file a financial accounting each year with the IRS. Charities must state how much money was raised, where funds were spent, and other important information about the charity’s operations in IRS Form 990. All organizations with gross receipts less than $25,000 are placed on “extended reporting” status, this only requires a filing every 10 years.c