Fall is officially upon us, and with Thanksgiving and Christmas right around the corner, the season often begets an abundance of holiday cheer and a propensity for giving to others. As a result, you may begin to notice a surge in direct mailers, postcards, and emails from charities and nonprofits looking to take advantage of the generous holiday spirit.
In 2018, a whopping $427.71 billion was donated to charities in the United States alone. With *so* much money being funneled into organizations, it’s no surprise that many are being caught misusing their funds. You may recall the American Red Cross came under intense scrutiny after it was revealed the organization used almost $125 million on “internal expenses” after raising nearly $500 million following the devastating 2010 Haiti earthquake. The verdict is still apparently out on how they used the remaining funds.
Many charitable philanthropists are also being duped by sham charities. In June of this year, a $2.5 million settlement was reached in a lawsuit against four cancer charities that raised millions of dollars between 2008 and 2012, only to use a measly 3 percent of the funds to actually help cancer patients.
With so many charities and nonprofits out there claiming to do good in the world, choosing an organization to support can be taxing, to say the least. If you’re planning on taking part in the year-end, gift-giving season—here are five tips that will aid you in vetting charity organizations to help ensure your dollars are well spent.
5 Tips For Choosing A Reputable Charity To Support This Giving Season
1. Identify your values/preferences
In order to help you decide what type of charity you would like to support, first determine what issues are most important to you. Do you want to help the homeless? End world hunger? Perhaps you want to support an animal advocacy group or an organization that works to fight climate change. Eliminate charities that don’t fit in with your criteria and then make a list of organizations that specifically work to address the issues you’d like to invest in.
2. Utilize third-party charity evaluators
Once you’ve got a handful of potential charities you’d like to support, you can begin to vet them using online databases like Charity Navigator, the Better Business Bureau (BBB), and GuideStar. Watchdog sites like the aforementioned provide a wealth of information on various organizations—such as their revenue and expense data, their levels of transparency, and their overall performance. Of course, you don’t want to rely on any one third-party evaluator, but they are useful for learning the basics. Make sure you read the reviews!
3. Interview potential charities
A well-organized charity will almost always have a development department whose primary function is to cultivate quality donors. Once you’ve narrowed down your prospects, think of questions you’d like to ask of each one, and then reach out to set up an interview. (GuideStar crafted a helpful list of suggested questions to ask, such as: What are the main obstacles that inhibit the fulfillment of your mission? How are you planning to overcome them? How much turnover have you experienced of employees and board members in the last two years?) If the charity has an office near you, ask if you can meet them in-person for a tour of their facilities.
4. Analyze financial reports
Tax-exempt nonprofit organizations are required to disclose financial information via IRS Form 990, the charity’s tax-exempt application, and audited financial reports. The Form 990 is especially useful because it details annual revenue, expenses (as allocated to the organization’s main programs), net assets, and the reportable compensation for the organization’s key employees/director. You’ll want to pay close attention to the latter, and compare these financial statements with the forms of similar organizations.
5. Research accomplishments
One of the easiest ways to see how a charity is using their funds is to find out what they have accomplished throughout the years. Peruse an organization’s website and see what types of campaigns they have initiated—and followed through with. Are they succeeding in accomplishing their mission? Are they meeting their objectives? If they’re receiving millions in donations but have a rather meager list of achievements—it’s not a good sign. Make sure you pick a charity that follows through with their mission and has something to show for it!
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Photo: Kat Yukawa via Unsplash,