Knowing Where the Donations Go Takes the Guesswork Out of Giving

Donors might be surprised to find that used cars and other gifts to charities can provide far less bang for the buck than imagined, according to the head of a group that scrutinizes giving.

Used cars have mushroomed in popularity as a charitable gift, but many donors may not know that sometimes all but $100 of the proceeds go to the middleman making the pitch rather than to the target charity, said Bennett Weiner, director of the Philanthropic Advisory Service.

Weiner, whose group is a division of the Council of Better Business Bureaus that researches charities and advises consumers about their practices, suggests donors check out any organization before donating a car--or any gift, for that matter.

The need for diligence is especially great at this time of year, as legitimate charities and scam artists alike ramp up their pitches in an effort to grab a share of America’s renowned generosity.

“Some charities bring in one-third to one-half of their total revenues during the last month or two of the year,” Weiner says. “They rely on holiday giving to finance their operations all year long.”

With natural disasters ranging from Florida fires to Texas floods to hurricanes that devastated Central America and the Caribbean, the needs of charities are especially great this year. And that makes it all the more important that donors carefully evaluate appeals to be certain their money is going to a cause, not a crook, experts say.

The holidays are the ideal time for charitable appeals for two reasons: People are in a giving mood, and they know it’s their last chance to get a tax deduction for charitable contributions in the current year.

But some of the appeals you’re likely to receive won’t come from legitimate charities, as con artists invariably take advantage of the holiday giving season.

Here are a few things to keep in mind when determining whether your money is going to a legitimate charity and will be put to good use:

* Car donations. Legitimate charitable organizations are increasingly asking you to donate your used car, pitching the idea via radio, television and newspaper ads--even making unsolicited calls to your house. However, what you may not know is that few of these groups use the cars within their organizations. Instead, they contract with outside vendors to solicit donations and sell the cars they receive. The charity gets just a portion of the proceeds--in some cases, less than 20% of the sales price, Weiner notes. In others, the charity receives a flat fee, such as $100 per vehicle.

If you’re planning to donate your car, make sure you know how much the charity will actually receive. If you want it to get the maximum benefit, you might want to sell the car yourself and donate the proceeds.

* Giving in haste. Legitimate charities are in business long enough to wait for your check to arrive in the mail. They don’t send solicitors to your door. Nor do they balk at sending you information about their programs so you can consider whether you want to donate.

Crooks, on the other hand, want you to part with your money before you have a chance to check out their organization or come to your senses. Consider high-pressure sales tactics a red flag.

* Personal pledges. Don’t give out your credit card numbers, Social Security number or bank account number to callers, regardless of the charity they supposedly represent. One consumer says a charity telemarketer asked her to give the last four digits of her Social Security number to “prove” her pledge, Weiner notes. These numbers can be used to steal money from your bank account or activate credit cards that have been stolen from your mailbox.

* The name game. There are more than 650,000 tax-exempt charities, with about 25,000 new ones created each year. That means there are numerous legitimate organizations to serve virtually every cause--often with similar names. However, each charity’s method of helping can be dramatically different.

Whereas one cancer-oriented charity might spend all its money funding research, another might spend it making and distributing booklets about the causes of cancer. Both are legitimate uses of funds, but if you have a preference about how your contribution is used, make sure you know which group does what.

Con artists use name confusion to defraud donors. For example, they might call themselves the American Cancer Assn. or the American Cancer Fund, instead of the well-known and legitimate American Cancer Society, in the hope you won’t notice the difference.

Kathy M. Kristof is a syndicated columnist. Write to her in care of Personal Finance, Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053, or e-mail [email protected].