Giving gifts of money

This is the time of year that many of us make year-end charitable donations. Doing ‘due diligence’ is the best way to give wisely – even for organizations we know well and have supported for years.  Leadership can change and the non-profit you’ve been supporting may no longer be as efficient as it once was. Find out how your favorite non-profits are rated and evaluate the ratings when you consider supporting new efforts.  Here are some steps you might consider taking before you start writing checks.

Do a background check: There are several great websites that evaluate and rate non-profits based on their financial health, accountability and growth.  There are over two million non-profit organizations in the U.S. and sometimes it feels like all of them are soliciting me!  By the way, the ones that are relentless about sending too many letters and making too many intrusive telephone calls may be spending too much money soliciting funds and not enough on their mission.  Be curious about how the organization is spending its money.  75% for charitable work and 25% for fundraising and overhead costs is a general rule of thumb.

Charity Navigator (see our earlier article) and the American Institute of Philanthropy rate and analyze major non-profits.

GiveWell and GlobalGiving provide lists of their suggestions and recommendations of domestic and foreign charities to support. You can choose by geographic area or by cause.

GuideStar has a comprehensive database of nearly all the charities in the U.S. with lots of information.  They also have very helpful tips to choosing a charity.

Contact the organization directly:  Go visit, volunteer, check out their website, read the literature, ask the difficult questions.  They should be clear about their mission, what their future goals are, and how your money will be spent.  Do a news search to make sure there are no controversies surrounding the organization.

Some final thoughts and facts:

  • Your money will have a greater impact if you give sizable donations to 3 non-profit groups rather than token donations to 30.
  • Of all the countries in the world, the U.S. has the highest rate of altruism.  About 40 million Americans donate money to a charity annually.
  • Make sure you write checks for your donations instead of giving cash.
  • Only 35% of donors do any research on the groups they’re supporting.  Make sure you’re among them!