The Attorney General provides Consumer Alerts to inform the public of unfair, misleading, or deceptive business practices, and to provide information and guidance on other issues of concern. Consumer Alerts are not legal advice, legal authority, or a binding legal opinion from the Department of Attorney General.
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Charitable organizations often pull at both your heartstrings and your purse strings to get donations. They ask generous Michigan residents to give time, money, or goods. These charities do important work in our communities.
As donors, we must choose among the many charities asking for our donations. Most of these organizations operate with charitable intentions. But there are a number of “charities” where little of your donation finds its way to the worthy cause. So you should educate yourself regarding any charity before donating. You have a right to know how your donation will be used. The many wonderful, legitimate charities in Michigan will gladly provide you with any information you request.
This alert will help you make an educated choice. The Michigan Nonprofit Association and the Michigan Association of United Ways have partnered with the Attorney General to create the joint annual release, Giving Wisely (PDF). That and more information regarding charities is available on the Attorney General's website. Below are some of the tips to help you give wisely.
A charity should give you enough time to check its information. If it refuses, consider it a warning sign. Be cautious about phone requests for money from groups you don’t know. Ask them to mail you details about the charity before deciding to donate.
If you give money through a website, make sure the charity lists a real street address in its contact details. Avoid organizations that only give a P.O. box. For in-person requests, ask to see the person’s ID. If you’re unsure, let them know you need more time to decide which charities to support.
Most charities need to register or get a license from the Attorney General if they collect donations in Michigan. This includes professional fundraisers and police or fire groups. They also need to file financial reports every year with the Attorney General. You can check an organization’s status on the Attorney General’s website or by calling 517-373-1152. Registration does not mean the charity is endorsed. It only shows that the charity has filed its annual reports, which are open to the public.
Some groups don’t need to register. For example, churches can ask for donations without registering. If you're unsure about a charity’s status, contact the Department of Attorney General. Their staff can tell you if the group is exempt from registration.
Many people are surprised to learn that less than 10% of their donation may go to the charity. Some charities work with professional fundraisers who agree to give the charity only 10% or 15% of the total donations collected. This is why it’s so important to learn about a charity before you donate.
Ask, “What percentage of my donation does the charity keep after all fundraising costs are paid?” Use this exact wording. The person asking for your donation should give an honest answer. Some charities have bank accounts in their name, and if you ask, “How much does the charity get?” the person might say 100%. But in reality, the charity may get very little after fundraising fees.
Find out who the donation requestor works for. Are they part of the charity or a for-profit fundraising company? Some professional fundraisers keep most of the money they raise, even if they claim to work for the charity. Write down the information they give you and check it with the Department of Attorney General. Charities and fundraisers must file their contracts with the Attorney General.
You can also ask the charity, “What percentage of my donation goes to program services?” and “How much is used for administrative or fundraising costs?” Program services are the charity’s main purpose, like feeding the hungry or housing the homeless. In some cases, a charity may spend most of its money on fundraising or its founders instead of helping others. Charities should be able to tell you what programs they run with your donations. They should also provide an annual report showing how much goes to programs and how much is spent on other costs.
With so many good charities out there, make sure your donation is used wisely. If a charity is not clear about where your money goes, consider giving to another one.
Lastly, remember that if you are speaking by phone, you can always politely end the call. Research charities on your own at AGCharitySearch or on sites like GuideStar, Charity Navigator, or the National Center for Charitable Statistics. When possible, give directly to the charity you trust.
If you’re not happy with the information you get from a charity, you can check their recent IRS reports. Ask for a copy of their most recent IRS Form 990 or 990 EZ. You can find tips on reviewing these forms in an article called How to Read the IRS Form 990 & Find Out What it Means (PDF).
The Department of Attorney General can give you copies of IRS Form 990 or 990 EZ for charities licensed in Michigan. For charities that don’t need a license, the Department can guide you to other resources. The National Center for Charitable Statistics and GuideStar both have great databases of IRS Form 990s.
If your donation isn’t money, ask the charity how it will be used. Items like clothes or household goods may not be used by the charity itself. These items could be sold in bulk for a flat fee to a company that resells them for profit. Cars that are donated may also be sold by another company. In these cases, the charity might only get a small part of the sale or a flat monthly fee. This is often in exchange for letting the company use the charity’s name in their business.
To make your donation tax-deductible, you must give to a qualified organization, like one recognized by the IRS as a 501(c)(3) charity. You can search for 501(c)(3) organizations using the IRS Tax Exempt Organization Search Tool.
Several factors can affect how much of your donation is deductible, including:
The IRS explains the rules for charitable contributions in IRS Publication 526 (PDF). For more details, call the IRS at 877-829-5500 or talk to a tax professional.
At certain times of the year, charities may encourage donations to help you increase your deductions. Keep these points in mind:
Many charities maintain websites that will give you detailed information about their programs, structure, and financial reports. This is one way to gather information you can use to give wisely. But anyone can put up a website. Some scam “charities” have very professional-looking sites. Do not let a website be your only guide. Some useful rules to follow are:
Most charitable groups are committed to helping solve society's problems. They will give you the respect you are owed as a donor. They will also give you the time and answers that you need to make an informed decision. Here are a few tips to avoid mail and telephone solicitations that steer donations away from these legitimate organizations.
Review the AGCharitySearch page and the Attorney General's website. You should also email or call the Attorney General's Charitable Trust Section at 517-335-7571 to inquire about a charity. For questions about police and fire organizations, call the public safety organizations hotline at 800-769-4515.
Check on an organization's license and learn more about charities and public safety organizations on the Attorney General's website. This is where you can also find information about the laws charities must follow.
To file a complaint about a solicitation, please call one of the numbers above or file online on the Attorney General's website.
Learn the facts first, then please donate generously.
Consumers may contact the Attorney General's Charitable Trust Section at:
Department of Attorney General
Charitable Trust Section
P.O. Box 30214
Lansing, MI 48909
517-335-7571
Fax: 517-241-7074
Email