Donating Wisely
Twenty-two percent of all charitable online donations happen in the last two days of the year, and so in honor of the tax – and giving – season drawing to a close, we take a look at how best to select non-profit organizations.
Understand the Mission
First, ensure you understand the charity’s mission and purpose before handing over your tax donation or gift. See to it that any generic, lofty or idealistic language like “Our organization feeds the hungry” or “We provide job placement for the homeless” is backed up with real-world specifics — as in, how the initiatives are run, what benchmarks have been achieved, how many people are served, etc. A red flag is if you cannot easily find this information on the charity’s website — however, a quick call can confirm this sort of information from the program manager, who should be able to quote these stats easily. If he or she can’t, consider yourself warned.
Additionally, most groups mention their religious associations in their mission statements — however, political affiliations may be more difficult to suss out. Your charity’s annual report should be able to disclose how much money, if any, goes toward lobbying or political action. The Better Business Bureau’s Wise Giving Alliance can help you access spending reports on many national and local charities.
Verify Non-Profit Status
Before you dig into your charity’s financials, you might want to first confirm the group’s non-profit status. Just because your chosen charity’s website ends in .org, does not make it a legitimate nonprofit. This one simple step is incredibly easy, yet, it’s the most overlooked and ignored: Simply go to GuideStar.org, a nonprofit database, and enter the charity’s name to find out if it has a 501(c)(3) designation by the IRS. This tells you that the program’s financial donations are specifically being used for charitable purposes, and that the group is making their financial information public. But most importantly, you can tell you if your donation is actually eligible as a tax deduction. In order for the nonprofit to be legit, the org must have a 501(c)(3), or you won’t be able to claim your donation.
Research Spending Ratios
After you’ve verified your nonprofit is the real thing and it’s supporting a cause you believe in, you might want to check to see just how much of your donation will eventually make its way directly to the cause. The most efficient organizations spend 75 percent of their budget on the essential programs and services, and only a quarter on administrative costs. CharityNavigator.org is a site where you can find out a nonprofit’s spending ratio, to tell if your donation is actually going to make a difference in the lives of its benefactors — or if most of it will go toward this year’s new office printers and holiday party instead. One exception is if your nonprofit is in its start-up years — then the organization may be in its capital improvements phase and can be excused from the “75 percent” rule.
Real Simple Charities
Still stumped? According to Real Simple’s carefully vetted list of charities that truly make a difference, here’s a few worth checking out:
Partners in Health provides healthcare services to the poor, and some of their best work has been in Haiti.
Scholarship America provides college scholarships and financial aid to U.S. students who need it.
Conservation International studies how economic and human development affect natural habitats around the world.
Action Against Hunger feeds malnourished children around the world and helps communities grow their on food.
Remember, generosity doesn’t have to come in the form of a year-end tax donation — to make the most impact, experts recommend seeking out ways to volunteer your time and resources year round. But, if you do decide to donate this year, do your part to make sure it ends up in deserving hands.
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