The billions of dollars donated each year in this country by individuals, corporations and foundations goes a long way to improve our way of life. Charities help support the arts, clean up the environment, provide an option for at-risk kids, save animals, feed the poor, give abused spouses shelter, and so much more. There are an estimated 850,000 charitable organizations in the United States, plus virtually all organized religions. And the Federal Government recognizes the importance of charitable giving to qualifying organizations by allowing donors to deduct their financial or in-kind gifts from their taxes.

What is a qualifying charity?

There are 21 types of tax-exempt organizations under U.S. law. While all are exempt from federal income tax, only contributions to churches, and to what is known as a 501 ( c ) ( 3 ) non-profit organization can be claimed for a tax deduction. Generally they must be organized for scientific, literary, educational, environmental, or some other altruistic purpose that benefits the public. They are not to benefit a particular person. And all such organizations are required to file extensive paper work to support their tax exempt status, which includes such things as their mission statement, by laws, and a list of officers and board members. They are also required to have regular board meetings, keep minutes, and if they raise more than $25,000 annually, file a form 990 tax return. Although no tax is paid, the non-profit must submit a detailed annual budget, including how much was spent on fund-raising and administrative costs. This becomes a matter of public record. The United Way, The Humane Society of the United States, the Boy Scouts of America and the Salvation Army are just a few examples of tax exempt charities in the U.S.