Tuesday, January 6, 2015

What to Consider Before You Donate to Charity

You may have decided to give donations to charitable organizations this year but are uncertain about what to consider before you donate to charity.

It's important to do a little research before contributing your hard-earned cash. In this article, we'll look at a few ways to determine how to find one of the top non-profit organizations for you to provide a charitable gift to.

Research before making any donations to charitable organizations
Your first consideration about donating to charity should be to learn about potential non profit organizations you want to donate to.

Find out as much information as you can, including contact information and making sure they are a registered organization.

You also want to make sure you agree with the organization's values and mission. It makes no sense to support a pro-life organization if you are pro-choice.

Many non-profits have a webpage with their statement of purpose, and many organizations will have a point person who fields questions.

Good information to find out includes the following:

  • How many people does this charity serve?
  • How many grants (and how much money are they) does this charitable organization receive?
  • How many awards (and how much are they) does this nonprofit get.
  • What is this charity doing to stop the problem?
  • Are they addressing the main cause of the problem or creating s temporary solution?
  • How is my money going to be spent?
  • You should also determine the following: What is my charitable gift going to be -- i.e., am I donating my time, donating money to charity, or making an automobile donation to charity?

Local or global?

I'm a firm believer in the local community. I value local organizations because they are the backbone of my community.

I am more likely to donate to one of these non-profits than, for instance, a global organization such as Livestrong.

When donating locally, you can see how your donation affects the community, especially if you see how grateful a low income family is when they drive their car to work or the grocery store rather than walk.

Global non-profits, though, have the ability to make wide-scale changes if they are effective.

Finding the most effective non-profit organizations

As a donor, you want to make sure your money is used by the non-profit wisely -- the last thing anybody wants is to be donating money to charity and find out that gift paid for the CEO's Mercedes.

The best solution is to look at the financials of the non profit. By law in the U.S., a tax-exempt 503c business needs to file a 990 form with the IRS.

This form is available for the public to view. Websites such as GuideStar provides access to many 990 forms, but the charitable organization should be able to provide you with a copy of the form as well. (They are required to do so if asked.)

The form will contain all financial statistics and provide details about how the money donated is being used.

An effective organization will have less overhead to run it and more spent to run the programs that support its mission.

An organization, for example, that spends $4.5 million to fundraise $5 million is not effective. In this example, only 5 percent of the monies generated would actually be used by the organization.

This example does not provide a very good bang for buck charity to donate to.

Other tips to consider before donating to a charity

Up until this point, we've focused on being pro-active when donating to a charitable organization. Sometimes, though, we may get solicitations for donations and that's where we'll turn our focus.

Be wary of telephone solicitors asking for donations. It is one of the easy ways to donate to charity but the most troublesome.

 A reputable non-profit will not make you donate on the spot.

Any telephone solicitor should be willing to provide you with written documentation about the charity's goals, vision, mission, and finances. If the solicitor is unwilling to provide that information, hang up.

Also, be careful of organization names. Some nonprofits will have names that mirror more effective nonprofits. Don't be fooled into providing a donation to a organization that resembles one you've heard of.

A nonprofit can call itself, for instance, "The Police and Fire Organization Union of California" and not provide any money to public safety in your area. This is why it's important to find out where the money is going.

On the subject of police and fire: if you choose not to donate to one of these organizations, they can not refuse you emergency protection. As long as you are a member of the community and paying taxes, you will receive support from public safety workers no matter if you donate or not.

  • Dos and Don'ts
  • Do write a check
  • Do research the nonprofit
  • Do keep good records of previous donations
  • Do say "no" if you don't want to donate
  • Do be an anonymous donor if you choose
  • Don't give cash
  • Don't feel pressured to donate on the spot
  • Don't be fooled by an organization that has a name similar to a larger nonprofit

Now that you understand about giving to a charitable organization, you should be well-educated and know what to consider before you donate to charity.

Photo is by Don DeBold off Flickr, CC BY 2.0

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