It can be a challenge to decide which charity should receive your hard-earned dollars. Should you support the environmental group that just knocked on your door, the police association that called to ask for your support or the children’s charity that sent you a letter with a heart-wrenching picture of an orphan?
None of them, charity experts say. Instead, you should pick the charities and give money before being asked. Not only are you more likely to find groups whose missions matter to you, but your money will go further. When donors give money in response to a fund-raising appeal, only a portion of the gift goes for the charity’s mission, according to the American Institute of Philanthropy. The rest will be spent on the cost of the appeal.
Here are 10 tips to help make sure your money is well spent:
- Give to groups you know. It’s not always possible, of course, but experts say it’s the best thing to do.
- Make sure the charity is the one you think it is. Don’t assume you know a particular group or what it does.
- Ask if your gift is tax-deductible. Some nonprofit organizations that solicit gifts are not charities, meaning that you can’t deduct your donation at tax time.
- Make sure you understand the group’s work. Charities tackle problems in different ways.
- Make sure the charity is legitimate. The IRS maintains a list of all organizations registered as charities. Also check with your state’s attorney general or charities bureau, which is responsible for policing charities within the state.
- Don’t be afraid to ask questions. Charities are required to provide information about their programs and expenses. If you don’t get adequate answers, don’t give anything.
- Find out about expenses. Even if the charity is a good one, you might feel cheated if you later find out that most of your gift went to pay the people who called you up and asked for money, or to pay the salaries of the group’s top officers. In general, efficient groups will spend at least 65 percent of their funds on the causes they support.
- Think twice before giving to a university or hospital. While worthy, these institutions are also the heavyweights of the fundraising world, bringing in hundreds of millions of dollars a year.
- Volunteer. This can be a great way to get information about a charity before giving money. Hands-on experience will tell you how well-managed the organization is and how effectively it accomplishes its mission.
- Protect yourself. Don’t give out credit card or personal information in response to phone, e-mail or door-to-door appeals: They may be fraudulent. If giving online, locate the charity’s website yourself rather than linking through an e-mail. Above all, don’t give cash. Your best bet is to mail a check to the organization.
If you’d like more information on a particular charity, a good starting point is the charity’s own website, which should include details about programs and how gifts are spent, as well as financial information such as an annual report. Another source of free information is Guidestar, which posts copies of charities’ federal tax filings, or state charity regulators. The American Institute of Philanthropy; Charity Navigator; and the Better Business Bureau’s Wise Giving Alliance also offer ratings of charities. Some of the information is available free. For Christian charities, check out Ministry Watch or the Evangelical Council for Financial Accountability, which will tell you whether a charity is registered with them.
This article was originally published in Illuminations: Facts & Figures from people with a brighter way, a Rea & Associates enewsletter, 11/21/07.
Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.