PRACTICAL VIEW / CHECKING OUT CHARITIES : Donors Should Look for Specifics in Holiday Appeals

The state of California recently sued four fund-raising groups that allegedly raised $17.6 million but spent more than 95% of the money on salaries and expenses, with almost nothing going to charity.

The suits make donors wonder which charities they can trust as the barrage of holiday season solicitations arrives.

Consumer groups such as the Arlington, Va.-based Philanthropic Advisory Service, part of the Council of Better Business Bureaus, recommends that donors look carefully at appeals.

“A responsible appeal will explain the program that your money will help support,” says the service’s brochure. “For example, does the appeal describe how the organization is helping animals, saving the environment or fighting hunger? If not, ask more questions before you give.

“Also, watch out for overly emotional appeals that pull at your heart strings and say little about how the charity will accomplish its mission.

“Donors should pay particular attention to the name of the soliciting organization,” the service adds. “There are many charities raising funds for similar causes and some charities’ names sound the same.”

Because Los Angeles charities are required to register with the city’s Social Service Department, organizations here should be able to produce the department’s information card when a prospective donor asks.

The white card with a replica of the city seal lists the charity’s name, address and phone number. It also describes the fund-raising activity and its overhead costs and purpose. In a mall or other public place, solicitors should display their city registration cards.

Los Angeles County and many other cities have similar requirements.

When evaluating what part of your gift should go to the charity’s work and what part for salaries or fund raising, many government agencies and consumer groups recommend that 60% to 80% of every dollar be spent for charitable purposes.

A trustworthy mail solicitation will show what money was spent for what purposes, says the National Charities Information Bureau in New York. Also, calendars or other gifts that come with mail appeals create no obligation to pay for them or return them.

The bureau warns that telephone solicitations are risky. “Unless you are 200% certain that you know who you’re dealing with, we recommend that you don’t give over the phone,” says spokesman Daniel Langan.

“And never, never give your credit card number out over the phone,” Langan says.

The Philanthropic Advisory Service recommends ignoring pressure from phone solicitors who offer to pick up contributions in an hour.

“A charity that wants your contribution today will be just as appreciative getting it tomorrow,” says director Bennett Weiner. “If you need more time to check out a charity, take it.”

Shirley Flucus of the Los Angeles Social Service Department adds that in California, “a state law says you have 24 hours before they pick up your donation to give you a chance to change your mind.”

Many phone solicitors work for telemarketing firms and keep a high percentage of donated money, says Ellen Pais, who prosecutes sham charities for the Los Angeles city attorney.

“I don’t want to give the impression that these phone solicitors are all negative,” she adds. “Often the charity gets a small percentage of the money raised, but it may be more money than the charity would have had otherwise.”

Door-to-door solicitors are often a poor risk, says Flucus. “Most of the ones you’ll see going door to door--they aren’t really on the up and up.” Children who sell candy door to door usually work for businesses, she adds.

“They ask if you’d like to buy candy to help a boys’ or girls’ club. That’s not true. That candy is usually bought at (discount stores). They sell it to you for $3 to $5. The kids get 40% and the person who hires them gets 60%.”

Consumers may report suspicious solicitations to the Los Angeles City Social Service Department, local district attorney’s office or Better Business Bureau.

These agencies will forward multiple complaints to the state attorney general’s office for investigation.

Gifts and Taxes

How do you know if charitable contributions are tax deductible? Here are some guidelines:

* Only contributions made to certain types of tax-exempt organizations may be deducted as contributions on the donor’s federal income tax return. Principal among these groups is the 501(c)(3) category of the Internal Revenue Code, broadly termed “charitable organizations.” When in doubt about whether an organization is tax exempt, call the IRS at (800) 829-1040.

* Contributions are deductible for the calendar year in which they are actually paid or delivered.

* A payment to a charity qualifies as a deductible contribution only to the extent that the payment exceeds the fair market value of the privilege or benefit the donor receives. For example, if a charity charges $10 for a box of candy that would normally sell for $8, only $2 can be claimed as a charitable contribution.

Source: Philanthropic Advisory Service, Council of Better Business Bureaus Inc.

Who to Call

Have a question about a charity? Here are some sources of information:

* The Los Angeles City Social Service Department, (800) 77-DONATE, can tell you which local charities have registered with the city and what portion of donations they spend on overhead such as salaries or fund raising.

* A report on organizations that raise funds for California charities, and what part of those funds go to charity, is available from the state attorney general’s charitable trust section, 455 Golden State Ave., Suite 6200, San Francisco, Calif. 94102-3600.

* “The Wise Giving Guide,” evaluating 400 charitable organizations, is available by sending a self-addressed, stamped business envelope to the National Charities Information Bureau, Dept. 220, 19 Union Square West, New York, N.Y. 10003.

* “Give but Give Wisely,” a bimonthly list of the national charities generating the most inquiries, may be obtained by sending $2 and a self-addressed, stamped business envelope to Philanthropic Advisory Service of the Council of Better Business Bureaus, 4200 Wilson Blvd., Arlington, Va. 22203-1804.

* “The Annual Charity Index,” a paperback featuring descriptions and financial information on 203 of the most-asked-about national charities, may be ordered by sending $12.95 to the Council of Better Business Bureaus at the above address. Information: (703) 276-0100.