Counting on charitable gifts: make sure the nonprofits you give to are doing the work you want them to. (Finance).

As April 15 approaches, many gays and lesbians are happily filing tax returns that claim donations to nonprofit or charitable organizations.

Of course, a charitable donation is meant to be more than a tax break. It's also money that's supposed to better the communities we live in. And this is especially important to gay men and lesbians, who usually give to groups who do work that is close to their hearts--whether it be AIDS awareness, breast cancer prevention, or gay civil rights.

But how can you be sure that the money you're writing off is being used for the cause you've chosen--rather than being spent on excessive fees for consultants, high-cost fund-raisers, or lavish executive salaries?

Easy--just do your homework.

With a few exceptions, there are no legal requirements for how a charity spends it money. But various watchdog groups have set up rules of thumb on which to gauge prospective charities. The Better Business Bureau Wise Giving Alliance advises that a charity spend no more than 35% of its money on fund-raising and administrative costs.

Charity Navigator, meanwhile, has somewhat stricter guidelines, suggesting that no more than 21% go to fund-raising and overhead. Its figures are based on a 2001 survey of the 2,000 largest charities in the United States, which showed that on average about 12% of all money raised goes back into fund-raising, while 9% goes to administrative costs. Smaller charities may have to pay a higher percentage for things like advertising, but Charity Navigator's Trent Stamp says expenses should never consume more than 25%. "When you start getting beyond that, we think it means something is fishy."

Bennett Weiner, chief operating officer of the Wise Giving Alliance, cautions donors to watch out for five telltale signs when they are hit up for donations.

The first is the trick of what he calls "mistaken identity." With more than 850,000 charitable organizations with tax-exempt status, it can be hard to differentiate between organizations with similar-sounding names. Shady groups often use copycat names "with the intention to deceive," Weiner says. "Their sincere hope is that you get tripped up in the title. So there's a lot to be said for what's in a name."

The second red flag, he warns, is the use of excessive pressure to get a donation. "This is most often in terms of a phone call," he says. "Beware of someone trying to force you to make a split-second decision or giving you something like a 24-hour time limit. This is a tactic used to push people into giving without having the chance to look into the charity further."

A third tactic that should set off alarm bells: the tear-jerker. "Overly emotional appeals that harp on a problem without going into details about how the charity is combating that problem can be bad news," Weiner warns. This ploy is frequently used on people who may feel strongly about particular issues--such as gay and lesbian rights.

If the person asking for your money cannot enumerate specific programs, goals, and accomplishments of the organization, that's another potential sign of trouble.

And last of all, don't assume every group that asks for your money is a charity. Ask specifically if your contribution to the organization is tax-deductible.

In addition to these five instant signals, there is a host of other valuable information available for donors who are willing to do a little more research.

The charity itself should be a source of more information. Ask to see printed material or a Web site for more information. One specific document you may want to ask for is a copy of the group's annual report. Another is its IRS 990 form, a document required by law for all organizations that rake in more than $25,000 a year. This will also include a rundown of the compensation of the group's executives. GuideStar.com is a good Web site for looking up IRS 990 forms.

More detailed than the IRS 990 is an audited financial statement, completed by an outside certified public accountant. All large charities should have one and should be willing to send it to you without hesitation, Weiner says. But smaller, local charities may not necessarily produce one due to the cost.

Finally, both Weiner and Stamp suggest looking up information on a charity through monitoring watchdog Web sites, such as those run by the BBB and Charity Navigator.

When it comes to handing over your cash, Stamp advises, "People should be both skeptical and generous."

Dahir also writes for Business Traveler.