imageBy: Edwin L. Crammer, CPA – ​We are all aware of those street corner drop boxes that are to be found in the back of shopping center parking lots around town. The most prominent ones are from Goodwill industries that take your cast offs, recycle them, then sell them in their various retail stores located throughout the tri-county area.
​The funds generated from the resale of these goods goes to help people in need throughout the area. Goodwill as well as Salvation Army and Faith Farms, a local organization has been performing those services for many years.
​In order for these organizations to perform those services and to act as a not-for profit charity they would have at some time in the past applied to the Internal Revenue Service for recognition as a 501(C) type of organization. In order to operate as a 501(C) organization, they have to meet strict guidelines just to be accepted by the IRS as this type of not-for profit entity. They also have to continue to maintain those strict standards and reports to the IRS on a yearly basis of what funds they receive, how they receive them. and what they do with those funds.
​Keep in mind that all of the money received does not have to be used for charitable purposes as the IRS recognizes that in order to collect funds for charitable purposes, expenses will be incurred in doing so. Therefore, only a portion of the funds collected are used for strict charitable purposes. I intend to explored this portion of the equation in detail in a later article in the Spring of next year, when I write about those so called national charitable organizations.
​In the last year or so, a number of collection boxes similar to those of the legitimate charities have sprung up at various locations throughout the county. These boxes are not from charitable organizations but from For-Profit organizations that are mimicking the methods of the legitimate companies. By law legitimate charities of all types must write their 501(C) number on all solicitations for charity whether it is by mail or on the side of a collection box.
​If that 501(C) number is not written on the collection box, do not donate anything to the owners of the box regardless of what is written on that box. Most of these illegitimate solicitors write something on the box usually in large letters that seem to be for a worthwhile purpose but unless that number is on the box, the person who placed that box there is making a profit on those items by re-selling those items and keeping all of the income.
​You would think that the landlords of these shopping centers would be aware of what is being placed on their properties. This is not necessarily true, a few years ago, someone placed a box on the swale area of the shopping center where my office is. I noticed it and brought it to the attention of the landlord. He told me that although he passed the site on a daily basis, he thought little about it until I brought it to his attention.
​Another similar area of concern you should be aware about are those people who advertise the fact that you should donate your car to a specific organization. Now some of these are legitimate organizations and some of them are not.

​A few years ago, a potential client looked to hire me for his Accounting services and represented himself as a charity. I asked him what his business was and he told me that he collected old automobiles from individuals which he told them was for a charitable purpose. As his business was not a 501(C) organization, as I had discussed above, I asked him how he could represent himself as a charitable organization. He went on to explain to me that after he picked up the vehicles they usually ship them overseas where they pay a good price. I said to him what about the charitable portion of this transaction. His answer to me was that after he received the funds from the sale of the vehicles that incidentally cost him nothing, his only cost was what it cost him to pick up the vehicles, he donate to one of the local charities about 5% of the proceeds.
​Even when you donate a vehicle to a legitimate charity, the IRS has strict rules on what the maximum write-off one can take as a tax deduction on the donation of that vehicle, which is minimal. I will not go into detail on this type of tax deduction as this is not a column about taxes. If you want more information however, you can contact me direct.
​If you are not sure that an organization that you are about to donate to is a legitimate organization which is tax deductible the IRS website at has an area that you can go to that lists the names of all legitimate charities as well as their 501(C) number.
​So the moral of this story is that in this time of the year when people are in a charitable mood just be careful who you make that donation too, it may not be deductible.
To contact Edwin L. Crammer CPA e-mail: