What to consider when contributing to a nonprofit organization

By JOE KILGORE | Metro Monthly Contributing Writer

When I contribute my hard earned dollars to charitable organizations I look for the following characteristics:

• A clear mission statement should be present so as to communicate what the organization seeks to accomplish and why its purpose is important. One look at a clear mission statement and the reader should be able to understand the organizations goals, the need for the services provided and the value that those services provide.

• The ability to perform key functions is a common theme in all successful nonprofit organizations.  The different levels of success in the nonprofit world boils down to how good the organization is at: communicating their organization’s vision and mission; achieving results and maintaining their ability to track those results; securing the resources necessary to achieve results; and planning for the future.

Strong leadership is a key factor to a successful non-profit organization. This includes having: strong financial management and a board finance committee that regularly monitor their performance using budgets, cash flow projections and industry average comparisons; and  strong governance with written policies that effectively promote transparency, efficiency and accountability allow the organization to meet or even exceed set expectations.

Why am I contributing in the first place and what impact do I want to make?

Throughout the year I make many charitable contributions to several different organizations. Some donations are small and some are not. Some organizations are small and some are not. I like to help out where I can, but I do have a method behind my giving which reflects my values and who I am. Here are a few things to think about when you are deciding to donate:

• Who am I and what do I value?  Your contributions are going to make an impact, so what impact do you want to make?  Whose life do you want to change?  What are you passionate about?

• At what level do you wish to make the change?  Change can take many different routes.  You can donate your time and your skills and sometimes that leads to a direct impact.  You can donate money to an individual, an organization or a network of organizations that may use that money and make an impact indirectly.

Charitable contribution deductions

According to the IRS, you may deduct charitable contributions of money or property made to qualified organizations if you itemize your deductions. Generally, you may deduct up to 50 percent of your adjusted gross income, but 20 percent and 30 percent limitations apply in some cases.

Qualified organizations

You may deduct a charitable contribution made to, or for the use of, any of the following organizations that otherwise are qualified under section 170(c) of the Internal Revenue Code:

• A state or United States possession (or political subdivision thereof), or the United States or the District of Columbia, if made exclusively for public purposes;

• A community chest, corporation, trust, fund, or foundation, organized or created in the United States or its possessions, or under the laws of the United States, any state, the District of Columbia or any possession of the United States, and organized and operated exclusively for charitable, religious, educational, scientific, or literary purposes, or for the prevention of cruelty to children or animals;

• A church, synagogue, or other religious organization;

• A war veterans’ organization or its post, auxiliary, trust, or foundation organized in the United States or its possessions;

• A nonprofit volunteer fire company;

• A civil defense organization created under federal, state, or local law (this includes unreimbursed expenses of civil defense volunteers that are directly connected with and solely attributable to their volunteer services);

• A domestic fraternal society, operating under the lodge system, but only if the contribution is to be used exclusively for charitable purposes;

• A nonprofit cemetery company if the funds are irrevocably dedicated to the perpetual care of the cemetery as a whole and not a particular lot or mausoleum crypt.

The best helpful tools when looking to contribute

IRS Exempt Organizations Select Check is an on-line search tool that allows users to select a tax-exempt organization and check certain information about its federal tax status and filings.  It allows users to check whether an organization:

• Is eligible to receive tax-deductible charitable contributions;

• Has filed a Form 990-N (e-Postcard) annual electronic notice;

• Has had its tax-exempt status automatically revoked because it has not filed its required Form 990-series return for three consecutive years.

GuideStar.org is the world’s largest source of information on non-profit organizations. They provide as much information as they can about each nonprofit’s mission, legitimacy, impact, reputation, finances, programs, transparency, governance, and so much more. They do that so you can take the information and make the best decisions possible.

Joe Kilgore, CPA, CGMA, is the Partner of accounting and auditing for all four of HD Davis CPAs’ Ohio offices. He has 10 years of experience providing audit and consulting services to not-for-profit, retail, manufacturing, service organizations and other organizations. Kilgore is the director of HD Davis CPAs’ not-for-profit niche, where he assists not-for-profit and governmental entities with audit and general business consulting. He has a wide range of experience relating to A-133 compliance and controls, including programs granted under various federal, state and local departments.

© 2016 Metro Monthly. All rights reserved.


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