“Truth never damages a cause that is just.” ― Mahatma Gandhi
There has been a lot of talk about transparency in the political arena lately. However, my post is focused on transparency in giving. How can you be certain that your donation will serve others and not be used for administrative purposes? Can you earmark specific donations to an organization that has a tax-deductible status? What are the best crowdfunding and fundraising websites? And, how can you be certain that your donation to one of the crowdfunding websites will be used appropriately?
I’ve researched the best way for me to solicit donations for my little La Paloma Library in Nicaragua. I’ve debated on whether to apply for a 501(c)3 tax-exempt status or continue as I have been, seeking small donations through fundraisers and crowdfunding websites.
I am preparing for the future because what will happen to my little library if I move off the island, travel more often, or return to the states? Can it survive without me? I’ve invested my money and time in developing a comprehensive program to meet the needs of the teachers and the students. It is my legacy. So, in preparing for the future, I want to leave a program that will last beyond me with solid plans and financial support.
So, Let’s Get Real about Transparency and Your Donations…
I. Everything you need to know about your donations to a 501(c)3 tax-exempt organization
This section gives me a headache! First, you have to determine if an organization is a charitable organization with a 501(c)3 tax-deductible status. According to the IRS tax-deductible donation rules:
The 501(c)3 groups receive the major part of their support from the public rather than from a small group of individuals. They also use the bulk of donated money to further their stated exempt-organization goals. The 501(c)3 groups include churches, hospitals, schools and groups that provide disaster aid, such as the American Red Cross, the Salvation Army and similar organizations.
If you would like to earmark your donation to be used for a specific purpose, it is important to know that charitable organizations welcome recommended designations, but that all gifts go to the organization and are subject to its control and final discretion.
When a 501(c)3 organization receives a charitable gift the organization is required to submit a written receipt to the donor stating (1) the donee organization has ultimate discretion over the destination of the contributions; (2) a confirmation that the donor intends for the organization, not the individual, to be the gift recipient; and (3) an acknowledgment of the donor’s preference to support a particular individual.
The last point is ambiguous in this area of giving because qualified organizations must remind donors that improperly earmarking gifts may compromise the deductibility of the donation.
For example, if an individual wanted to make a monetary donation to my library, I could partner with a 501(c)3 charitable organization so the gift could be tax-deductible. However, there is no guarantee, according to the IRS laws, that an earmarked donation will be used for my library.
This is where transparency is needed. All donors to a 501(c)3 organization must receive a written receipt of their donation as well as be informed that the charity has the final say about where the money will be used.
It is too complicated for me, a one-woman operator. I can’t see the advantage of partnering with a 501(c)3 organization because of the excessive requirements by the IRS with no guarantee that my library would receive earmarked donations. And because of the tangle of bureaucracy involved in becoming a 501(c)3 organization, I would rather keep it simple. In addition, many of my donors are foreign donors whose donations are not tax-deductible because it only applies to U.S. citizens.
II. Crowdfunding and fundraising websites
Crowdfunding websites allow individuals and businesses to solicit donations for any kind of project by accessing a large number of potential donors. There are advantages and disadvantages to using crowdfunding websites and the potential for abuse is always a concern.
Best Crowdfunding Sites for 2016
I have used YouCaring to Help Los Ramos Rebuild after a devastating landslide that destroyed their community and for donations to support The Divine Women’s Soccer Team.
Transparency in seeking donations on a crowdfunding website is important. I believe it is imperative to respond to each donor, to be specific in how their donations will be used, and to be open, honest, and accountable for the money spent.
For these reasons, I always write a blog post with photos about how the donations have been spent and help the recipients of the donations write a letter or make a video thanking the donors. Goodie Bags for Los Ramos Los Ramos Says Many Thanks
How do you know if a person is reputable who makes a crowdfunding website?
I have had some experience with this. After the landslides occurred that destroyed Los Ramos, a man posted on his Facebook page that he was seeking donations to help Los Ramos recover. I corresponded with him through private messages to see how I could help. I asked him specific questions about the people in Los Ramos. I know most of the people in this community because I have been involved with them for over 10 years and our god-daughter is from this community. I went to Los Ramos and asked them if they had received donations from this man ( I showed them a picture) and no one had ever seen him before.
He couldn’t answer any of my questions, which I thought was odd. He started a GoFundMe crowdfunding webpage asking for donations. He received over $1,000 in donations, but didn’t account for any of the money. No one in Los Ramos received any donations from him. So, I researched his name and found that he was wanted in Florida for scamming people. I contacted GoFundMe about his page and had his page removed for fraud.
Later, I saw him in Moyogalpa. I confronted him and told him I was aware of his fraudulent actions and I would contact the police. I think he used the funds to come to Nicaragua for a little vacation. Don’t mess with me when it comes to the lovely people of Los Ramos!!!
The next day, he left town, deactivated his Facebook page, and we never heard from him again.
People that fraudulently ask for donations to help others and then use the donations for their own personal use are, to me, despicable people…the scum of the earth.
III. Private donations through volunteering
I love volunteers, and I have had many volunteers come to my little library in La Paloma. Many of them do service learning projects, read to the children, and do fun projects with them. Usually, before they leave, they ask what we need the most and make donations.
Since I am actively involved in the library, I know what the students and teachers need the most. Most of my books are from donors throughout the world. Many donations are made by people who read my blog, and want to volunteer in the library. When Go For Hope organization came for a service learning project, they donated many supplies.
Service Learning and the La Paloma Library. Through a partnership with Go For Hope, they have helped the students and teachers by providing school supplies, and donating funds for a new roof for the library and a safe to keep our electronic equipment secure.
Truth never damages a cause that is just! There are many wonderful organizations, both private and public, that work hard to serve their local communities in Nicaragua. As donors, you have many options as to where and how to give.
Research the organization carefully to make sure it will meet your giving needs. Transparency is important. You should never wonder if your donation was received and how it was spent! Accountability is to an organization, as trust is to a donor.
Researching this post helped me decide the direction to go in the future for my library. Stay tuned for my new website for the La Paloma Elementary School and how you can help.
How do you decide where to give your time and money?