How to give to charity

My Auntie D. and I have both worked extensively with charities.  So to us, thinking about giving to a charity and how the charity uses the money is like second nature. But to some people in the mainstream, you just don't know. You might think, "Oh, but I want to save the children!" and your desire is in the right place, but you need to know how your money is being used.

So here's a guide. MY guide.

>>> If you want to give to an international charity, make sure they have a stateside office.

>>> Don't fund any organizations that also provide money to terrorist organizations. Duh. But this includes UNICEF, of which I was kindly informed after giving to them for Haiti relief.

>>> Check to make sure the charity you want to give to is allowed to raise funds in your state.  In Pennsylvania, there's a bureau of charitable organizations in the State Department that a nonprofit must register with in order to ask for funds. I don't think all states have their own registration requirement but you'd best check it out. That means the state has done some due diligence for you. If they aren't listed, don't give. If you know the people at the charity, tell them to register with the state. 

>>> Use sites like Charity Navigator, Guidestar to do your own due diligence. What does their Charity Navigator pie chart look like? Do they have a Guidestar profile?  Do they file a full IRS 990 tax return?  Read it. You see what the management and board's compensation is, what is spent on mission-based programs vs. promotion and fundraising. Use your judgment - does it add up for you? 

I don't like to give to large organizations that aren't ranked as 4-star on Charity Navigator, or organizations that spend more than 15% of their annual income on marketing and fundraising expenses. Some nonprofit experts think that formula is too simplistic. Some don't agree with it. Whatever, it's my blog, I'm calling myself an expert.

The fact is, in any business, (and charities are businesses) it costs money to make money. The difference with nonprofits is that mission comes before profit. 

Yes, non-profits can be profitable! But that profit on the books must be reinvested into the mission. Every decision they make, which is reflected in the 990, especially in the new 990 forms implemented in 2008, needs to support their purpose. Not to pay for a board retreat in the Canary Islands, or an expense account for the development director to have lunch with cronies every day of the week, or to print endless amounts of image brochures, or to pay an executive director a salary of $180,000 in an industry and region where other executive directors are earning $80,000. 

This is where Auntie D. and I differ.  I feel that if a charity's CEO earns big duckets that is not necessarily wrong. Just that it's all relative. How effective is that CEO, how committed is she to the mission, how does her salary stack up against others in the field?  Does the organization have a $50 million budget and a $1 million endowment to manage?  It's worth paying her what it requires to keep everything on track and moving forward.  Why pay her much less than her for-profit counterparts?  And of course the overpaid CEO is rarely a "she."  Silly!

Conversely, many people in nonprofits are woefully underpaid for the responsibilities and job stress they have.

>>> Give locally.  It could be to a local chapter of the Sierra Club or Boy Scouts vs. the national headquarters.  Giving to local chapters or programs which are based on an existing model is not a bad thing at all.  Often they operate very efficiently because the organizational legwork has been decided for them. However, in the case of one of the aforementioned organizations, there may be so much bureaucrazy that you have no idea where your $50 is going to go.  Plus some national organizations have too many places to hide the money.

By the way, they're not allowed to hide anything from you. Since they're publicly supported, these charities, they have to provide you with their IRS returns if you can't find them yourself.

>>> Be wary of new charities. Are they duplicating work of other charities in your community? Why are they forming?  Who else is supporting them?  What need are they addressing? What type of funding are they getting - is it all from one or two wealthy individuals, or is it a good mix of sponsorships, individuals, foundations, businesses, in-kind contributions, government and fundraising events?  Hey, those are good questions no matter the age of the nonprofit.

Do you have to go through this whole thought process just to text your ten bucks to the Red Cross in Nashville, or to sponsor your friend in the JDRF Walk?  Maybe. 

>>> And, finally, know thyself, why you give and what or who you're supporting.

I could give you a list here of all kinds of resources but I don't feel like it right now. Maybe later. But I do feel like hearing what you have to say about giving.

Comments

[D]

Well done, TU! xo,D