Looking to spread some holiday cheer this year by giving
back? Maybe you want to make a charitable donation to your favorite non-profit,
but before you do, make sure you know the important things below before doing
so.
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Being selfless can feel satisfying, but with a hectic
holiday schedule it may be hard to explore what non-profit you want to
contribute to. Luckily, Real Simple[1]
asked leading philanthropic experts to come up with a set of straightforward
criteria for separating the best from the rest. Find your perfect charity by
continuing to read below.
Make Sure That You Understand the Charity’s Mission
On websites and in literature for nonprofits, vague, lofty
rhetoric abounds. Groups might pledge to “aid the impoverished nationwide” or
“eradicate disease.” And that’s fine, as long as that ambitious language is
accompanied by real-world specifics. “Legitimate charities typically give detailed
program descriptions on their websites,” according to Bennett Weiner, the chief
operating officer of the Better Business Bureau Wise Giving Alliance, a
monitoring and standards-setting organization for charities. That means you
should expect to find the following information clearly delineated: how each of
the nonprofit’s initiatives is run; what benchmarks have been achieved by those
programs in the past; how many people are served by the initiatives; and how a
potential client qualifies to receive a service. If such nitty-gritty
information is absent, contact the group’s program manager. She should be able
to provide you with those facts and figures. If she can’t, consider it a red
flag and donate your money elsewhere.
Verify the Group’s Nonprofit Status
You want a charity that has been granted a 501(c)(3)
designation by the Internal Revenue Service. Why? This means that the donations
that the group receives are used for charitable purposes; that your gifts to
the organization are tax-deductible; that the group makes financial information
public; and that strict rules govern how much it can spend to lobby the
government. It’s simple to determine if a group is a 501(c)(3): Go to
GuideStar.org, a nonprofit database, and enter the name. Bear in mind that just
because a website ends in .org doesn’t mean that the group is a legitimate
nonprofit. If the organization isn’t a 501(c)(3), move on, because your
donation might not be tax-deductible.
Inquire About the Charity’s Spending Ratio
When you donate, you want your money to make a
difference—not pay for office furniture for the charity’s director. A rule of
thumb: The most efficient organizations spend at least 75 percent of their
budgets on programs and services (this is referred to as the “spending ratio”),
with the remainder going toward administration and fund-raising costs, says
Debra Snider, the vice president of operations for GuideStar.org, an
informational database of nonprofit organizations. Obviously, the higher the
spending ratio, the better, since it illustrates the charity’s productivity.
You can easily find this information by looking at a nonprofit’s financial
analysis on CharityNavigator.org. (The site updates charities’ financial data
annually, and some accountability figures are updated monthly, so don’t worry
that you’re not getting the most up-to-date information.) If you have further
questions about how the group spends its money, contact it directly and ask to
see the most recent annual report. Often it’s available on the organization’s
website. But what if the non-profit you’re interested in doesn’t meet the 75
percent spending ratio? Experts say the group might still be worth considering
if it’s undergoing capital improvements, such as building a new office; if it’s
a start-up, whose expenses are typically higher; or if it’s located in a big
city, where administrative costs can eat up a bigger chunk of the overall
budget. So you need to exercise judgment in these cases.
Look for Accountability and Transparency Practices
Well-run charities should be open about their management,
with a CEO and a governing board that includes people who aren't part of the
charity to allow for objective analysis. The Better Business Bureau Wise Giving
Alliance and CharityNavigator.org evaluate charities on this criterion,
presenting the information in easy-to-read checklists. Most groups mention any
religious associations in their mission statements but may be less forthcoming
about political affiliations or any positions they’ve taken on legislation. If
you’re concerned, look at the charity’s annual report, which should disclose
how much money, if any, goes toward lobbying or political action.
Ask About Results
Most responsible midsize to large organizations use either
self- or third-party assessments to evaluate their efficiency and
effectiveness. (You can contact the charity to request the most recent one.)
Take a jobs program, for example. You want to know not only that the group
found positions for 100 people but also that one year later a realistic
percentage—say, 50 percent—were still employed. And what if you’re interested
in donating to a brand-new charity with bold ideas but not much of a track
record? Elizabeth Gore, the former vice president of Global Partnerships for
the United Nations Foundation, a nonprofit that works with the United Nations,
suggests that you take a leap and send a check, as long as the group meets the
other criteria on these pages. After all, she says, “some of those charities’
innovations could lead to revolutionary, long-term change.”
Many would agree that giving to others, especially those in
need, feels good. Go out and enjoy the season of giving, but when you get home
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Should you encounter a life threatening emergency, simply
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Works Cited:
1.
Taui, Bonnie. “The 5 Essential Things You Need
to Know Before Making Charitable Donations.” Real Simple. 30 November 2018. <https://www.realsimple.com/work-life/money/charitable-donations-0 >.
