I t's better to give than to receive—but it wasn't always easier until the advent of online giving.
E-philanthropy, as the phenomenon is known, is the act of making charitable donations online. And it's becoming increasingly popular as more and more nonprofits scale the electronic fence.

Online giving still is in its infancy, which means there are many pitfalls for givers who don't do their homework. You'll still have to do some legwork by mail and phone. But the Internet is a great place to find and research a good charity before you click away the family silver.
    Web tools
    cut down
    the legwork

Find a worthy cause
With almost 1.5 million private nonprofits and charities in the U.S., you should have no problem finding a cause to suit your interests. Because of the vast number of nonprofits, however, it's impossible for any one government agency or organization to monitor them all. Clearinghouses such as America Online's Web site helping.org lists 620,000 nonprofits on its site, but it doesn't endorse them.

If you prefer to give closer to home, the Local Independent Charities of America can point you to a worthy cause in your area. Yahoo allows you to search organizations from its home page under the heading "Business and Economy." Your chamber of commerce, Better Business Bureau, or state government also should have a listing of local nonprofits and charities.

Is this the start of a new revolution?
Just how much money e-philanthropy will make for charities is anyone's guess. The American Association of Fund-Raising Counsel, New York, estimates that the total of all donations made in the U.S. last year reached $190.16 billion—an all-time high. But so far, only 1.2% of contributors say they give online.

The Salvation Army, a charity behemoth with a presence in 107 countries, has only allowed Web site donations for six months, so it's too early to gauge its success, the charity says. Save the Children has had considerable activity through its site, and receives an average of $147 from each of its Web site donors.

There are almost
1.5 million
private nonprofits
and charities
in the U.S.

By itself, 501(c)3
status is not a
stamp of legitimacy
from the IRS
or anyone else.

Online giving for the enlightened mall rat
Shopping portals such as iGive.com and GreaterGood.com have blurred the line between for-profit and nonprofit organizations.

These portals—many prefer the term online shopping mall—act like the front door of a mall. After you register, you "enter" the mall and buy products from vendors registered with the portal. Often you pay the same or less than if you bought directly from the vendor's site. "You can shop for anything from toothpaste to clothes to luggage," says Jason Sherman, spokesperson for iGive.com. The iGive.com portal, started in 1997, was the first of its kind.

In most cases, the vendor pays the portal a percentage of the purchase price. The portal then splits the commission with a charity of your choice—at no extra cost to you or your chosen cause. Some sites, such as www.4Charity.com and www.charitymall.com say they don't take a cut of the commission.

Tax-deductibility is still a fuzzy issue for shopping portals. The National Charities Information Bureau (NCIB), an organization that promotes informed giving and evaluates charities, says donations to charities that result from these purchases are not tax-deductible.

In 1999, however, iGive.com designed a patent-pending system that allows members to deduct the portion of their purchases that were donated to qualifying organizations, but adds that it may not apply to every person or situation.

To date, GreaterGood.com has generated more than $2 million for the causes on its site. iGive.com's 115,363 members have raised about $788,000 for more than 9,000 causes with an average donation of 8% of the purchase price. At iGive.com, members can elect their own causes and the portal will conduct a background check.

"We allow people to raise money for anyone, as long as the organization doesn't advocate violence and isn't political," Sherman says.

As a result, the portals have given exposure to many small nonprofits that would have been overshadowed by better-known charities like the American Red Cross or the American Cancer Society.

Not all the sites are as forthcoming as iGive.com or GreaterGood.com so you need to be particularly cautious. Before you sign up, read the terms of the agreement. They often can be found under the "FAQs" or "About Us" sections of a site. And don't be afraid to call the charity to ensure that your donation arrived.

"We're still fairly early into the online experience," says William Massey, president of the NCIB. That means less information is available about the charities registered with the portals. That's likely to change in the future, he adds.

It's an e-jungle out there
Anyone can nail up a shingle in cyberspace and call it a charity. So how do you separate the worthy from the unworthy? Whether you're donating through an online shopping mall, the organization's own Web site, or by snail mail, you'll want to know a few things about your cause: Its mission or purpose, whether money is spent efficiently, how much of your dollar is used for programs, and how much for other expenses, such as administration or fund raising.

The NCIB and the Philanthropic Advisory Service (PAS), an arm of the Council of Better Business Bureaus, suggest a charity should spend at least 60% of every dollar on programs.

Charitable portals have
given exposure to
many small nonprofits
that would have been
overshadowed by
better-known charities.

Conduct an open book exam
One measure of a good charity is something you can't always find online—its willingness to share financial information freely. Another simple standard is, "Do they do what they say they are going to do?" says Massey.

A good place to start your research is the organization's own Web site. Also, contact a local chapter of the charity directly and ask for a copy of its annual report and IRS Form 990 (some organizations post this information on their sites). Any reputable charity will be happy to send you its financial information.

The NCIB, PAS, and the American Institute of Philanthropy (AIP) provide a host of resources on their sites, and a set of standards for nonprofits and charities. The PAS lists detailed information about 200 of the most-asked-about charities from their total assets to—in some cases—the CEOs' salaries.

The NCIB lists 400 major charities, as well as links to the Internal Revenue Service (IRS), the Federal Trade Commission, and government offices in each state that register charities. The AIP also rates 400 charities.

Although states are primarily responsible for monitoring nonprofits, the federal government provides a few safeguards. Many nonprofits are listed as 501(c)3, that is, they have been granted tax-exempt status by the IRS (religious organizations are not required to file for tax-exempt status). Generally, contributions to a 501(c)3 are tax-deductible, but check with the organization first.

All tax-exempt organizations are required to file a Form 990 every year with the IRS. The form is a statement of the organization's financial activities. Guidestar has thousands of Form 990s and other financial information stored in a searchable database of 640,000 organizations. You also can contact your IRS district office for a copy.

By itself, 501(c)3 status is not a stamp of legitimacy from the IRS or anyone else. And many sound charities are too small to qualify for 501(c)3.

No matter how you donate money, remember your financial situation is unique. Keep accurate records, hold on to your receipts, and consult a financial adviser before you make a gift of any significance.

Web tools cut down the legwork
The Web has a wealth of tools to find, research and monitor a charity, and to allow you to donate money online. Here's a sample of a few:
  • www.helping.org
    Helps people find volunteer opportunities and charities suited to their interests and provides resources to nonprofit organizations so they can use the Internet to organize, raise funds for, and publicize their missions and successes online.

  • www.charitableway.com
    This site provides detailed profiles and listings for thousands of charities and educational institutions, advice about giving, a variety of secure ways to donate online, and gives corporations access to online resources that allow them to easily manage and administer employee giving programs.

  • www.charitablegift.org
    This site sponsored by Fidelity Investments, is committed to increasing charitable giving and making it as efficient and effective as possible for donors through professional money management.

  • www.charitymall.com
    Every order you place when shopping at more than 100 top e-retailers on CharityMall.com will send money to your chosen charity at no additional cost to you.

  • www.charityweb.com
    CharityWeb exists to help charities take advantage of the Web to achieve their missions.

  • www.4charity.com
    Creates Web-based services to make charitable giving quick and easy for companies, nonprofit organizations, and individuals.

  • www.donornet.com
    Provides information technology and e-commerce solutions to satisfy the philanthropic needs of individuals, not-for-profit, and for-profit corporations.

  • www.giftsinkind.org
    Creates partnerships that link companies with a network of more than 50,000 nonprofit organizations to provide products and services to people around the world.

  • www.giveforchange.com
    Allows you to make online donations to causes that are important to you and provides access to hundreds of nonprofit groups.

  • www.mycause.com
    Shop at a retailer affiliated with MyCause and 2% to 12% of your purchase will go to your favorite cause at no additional expense to you.

  • www.shop2give.com
    Shop at your favorite online store and enjoy regular prices while having a percentage of that price contributed to the charity of your choice.

  • www.webcharity.com
    Individuals and companies can pledge new and used items to their favorite cause, which then will be sold via an auction or retail sale format, with 100% of the donation going to your designated nonprofit organization.

  • www.givetocharity.com
    A safe and secure way for nonprofit organizations to accept donations via the Internet.

  • www.ireachout.com
    Provides innovative online services to promote awareness and fund raising for charities and nonprofit organizations.

  • www.charitygift.com
    Make a charitable donation and let your gift card recipient choose the charity to receive the donation—you pay for the print or e-mail gift card and 100% of your donation goes to charity.

  • www.guidestar.org
    A searchable database of more than 640,000 nonprofit organizations in the U.S.

  • www.give.org
    Promotes informed giving and strives to enable contributors to make sound giving decisions.

  • www.charitywatch.org
    A charity watchdog service whose purpose is to help donors make informed giving decisions.

  • www.lic.org
    Local Independent Charities, a federation of more than 500 nonprofit charitable organizations, will help you find organizations that meet your interests and link you to them.

  • www.bbb.org
    The Better Business Bureau site gives you the opportunity to check a National Charity Report, ask or complain about a charity, and more.

  • www.ecfa.org
    From its mission statement, this site is "committed to helping Christ-centered organizations earn the public's trust by developing and maintaining standards of accountability that convey God-honoring ethical practices."

  • www.crcmn.org
    Web site for the Charities Review Council that seeks to promote informed charitable giving.

  • www.nonprofits.org
    Offers information for and about nonprofit organizations in the United States.

  • www.unitedway.org
    This site will help you learn about the United Way and how you can donate or volunteer within your community.

  • www.indepsec.org
    The Independent Sector is a national leadership forum working to encourage philanthropy, volunteering, not-for-profit initiatives, and citizen action.

© 2000 Credit Union National Association Inc.