Charitable giving of money, time, or donated items is a time honored way of helping others. In 2006, the USA gave about $295 billion to charity ($223 billion by individuals), up 4.2 percent over 2005 levels. While charitable giving has generally risen faster than the growth of the American economy for more than half a century according to GivingUSA.org., it remains to be seen what effect the downturn in the economy will have on charitable donations.
But before you you donate items, volunteer time, send a check, or make an online gift, check out your potential charities. It’s pretty easy to make use of websites like Guidestar.org, and Give.org. Both offer information on nonprofit organizations and what you should consider before making a donation. Here’s just a few things to consider as you research potential charities:
What is the organization’s mission statement?
Does it match your ideas for how you want your money to be used? Is this something you believe in?
Is the organization a certified 501(c)(3) nonprofit organization?
If you’re not sure, you can call or email the organization and ask for a copy of their IRS Letter of Determination. Don’t feel bad for asking either. Any reputable organization should be happy to fax, email, or mail a copy to you. Many organizations make their 501(c)(3) letters available online in pdf format.
Who calls the shots?
Does the organization have an independent Board of Directors? Do the members of the Board serve voluntarily or are they compensated for their service? It is best for Boards to be comprised primarily of independent, non-related members (i.e. no husband-wife or children of Board members) who are not employed by the organization. Preferably members of the Board will not be compensated for their service.
Does the organization disclose its financial information?
Do they have an audited annual report? Do they make their IRS Form 990 available to those making donations? Does the organization publish the percentage of funds that are used for administrative purposes such as salaries, advertising, overhead, fund raising, etc? How does that number compare to the amount of money that actually goes into helping the cause? Ask for a copy of the organization’s annual report and latest financial statements so you can see what activities the organization is actually involved with.
Is this nonprofit organization accredited by or affiliated with any organizations?
Accreditation gives instant credibility to organizations because they usually have a set of standards by which the charity must operate. It pays to check out the accrediting agency as well.
How will your donations be used?
If you are donating goods or services, will they be used directly or will they be sold to raise funds for the organization? This happens a lot with donated vehicles. If you’re donating money, will it be pooled in a general fund for operating programs and services, or will your money be directed to a specific project?
Will the money you donate in your country be used in another?
Most international charitable organizations have US and/or other country based “affiliates” that comply with requirements for charitable giving so that donors can give money responsibly in one country to help people or causes in other countries.
Who benefits from the work of the organization?
If, for example, the organization serves the elderly, how many people benefit, how do they benefit and is this a one time event, or will they participate regularly? What results has the charity produced with donations to date? Don’t be afraid to demand a little accountability.
If you don’t feel comfortable when talking to a representative of a charitable organization, or if you feel pressured to give goods, services, time, or money, just pass. There are many other organizations to choose from and few charities have an exclusive niche. If you’re cold called, ask that they mail you information (such as a brochure and their most recent annual report) before deciding to give. You should feel 100 percent comfortable with your decision to donate your hard earned money.
For more tips on what to look for in an organization before giving, read the Better Business Bureau’s Wise Giving Alliance Standards for Charity Accountability.