Before You Give

The September 11 terrorist attacks have brought out the best in most Americans, who have responded with an outpouring of charitable giving and a flood of new charitable organizations to help victims of terrorism. But these times have also brought out the worst in a few people—and some of them are in more of a taking than a giving mood. How can you determine whether a new charity is legitimate? Here's a checklist of items to consider.

• Know whom you're giving to.

  Don't give to organizations you don't know without doing some homework. Instead, ask where you can learn more about them, research the group, and contact them if you decide to give.

• Find out whether the organization is tax-exempt.

  Most legitimate charities have either obtained or applied with the IRS for tax-exempt status under section 501(c)(3) of the tax code. You can check on an organization's tax status on the IRS website. Keep in mind, though, that this web page isn't necessarily up to date, especially when it comes to new organizations. If you're considering giving to an organization that isn't listed on the IRS site, ask the group for evidence that it has applied for 501(c)(3) status. Other resources for determining which charities are legitimate include www.guidestar.org and your local better business bureau.

  And remember, you can also make tax-deductible contributions to government entities, like states, municipalities, or federal relief agencies.

• Use a check or credit card instead of cash.

  For large contributions, use a check or credit card. They're easier to track for tax purposes—and harder for an illegitimate charity to misuse.

• Don't give personal information to organizations you don't know—especially over the phone.

  If an organization you don't know calls you directly to ask for funds, don't give out your credit card number, Social Security number, or other personal information. Instead, research the organization and, if you decide to make a donation, originate the call yourself.

• Ask where your money is going—and how much is going to overhead.

  Charities should be able to explain how they'll use your donation, including how much will go directly to victims and how much will go to the organization's overhead. Some sham organizations funnel most of their donations to overhead like excessive salaries—and very little to the people they claim to serve.

• If it sounds too good to be true, it probably is.

  Beware of pitches that sound too good to be true, like promises that your gift will be matched by a corporation that you've never heard of.