One thing the best charities all have in common is that they allow you to easily see where your donated dollars are going.
If you’re interested in charitable giving, an organization’s transparency should be important to you. In fact, it should be one of your biggest concerns.
How to Choose the Best Charities for Your Money
Unfortunately, there are many charities that make it difficult to see what portion of your donation is going to the actual cause and what’s allocated to things like operating expenses.
In this article, we’re going to show you four steps to help you choose the best charities for your donations and contributions. Let’s get started:
1. Decide What You’re Passionate About
When it comes to giving, the adage to “follow your heart” is quite appropriate.
If you’re passionate about different causes like animals, veterans, the homeless, or something else, you’ll want to prioritize them so that your money can make the biggest impact where you want it to.
Consumer advocate Clark Howard gives his time and money to several charities that he's deeply involved in. Here are a few of his favorites:
After you’ve narrowed your list down to a few or maybe even one cause, it’s time to find your charity.
2. Find a Charity That Matches Your Passion
There are several ways to find a non-profit organization that you want to support.
You can also reach out to community organizations like local shelters and foster care agencies. You also might be surprised what you can learn simply from talking to a neighbor.
Another option is to search online fundraising sites. Here are some popular crowdfunding resources where you can find passion projects:
A great resource for finding non-profit organizations is Consumer Reports, which has a list of the best and worst charities.
Once you find a suitable charity, it’s time to do your homework…
3. Research the Organization Before You Give
A major part of charitable giving is to get to know as much as you can about the organization before you start writing checks. The following charity watchdogs make it easy to research organizations online:
Give.org is the website for the Better Business Bureau's Wise Giving Alliance, which not only provides donors information on charities but accredits them, as well.
Does it cost for donors to use Give.org? No
How they rate charities: Give.org uses icons to rate charities based on 20 standards, including complaints, donor privacy, conflict of interest and more. In their reports on charities, you'll see one of these three symbols:
- Green checkmark — "Standard is met"
- Yellow X — "Standard is not met"
- Blue question mark — "Unable to verify"
Give.org also lets you file a complaint against a charity, read and write reviews, and get tips on giving.
CharityWatch is a non-profit organization that has made it its mission to inform the public of wasteful or unethical practices by charities.
Does it cost for donors to use CharityWatch? There's a free version, but the site asks for a $50/year donation to get unlimited access to its services.
How they rate charities: CharityWatch assigns a letter grade (A+ to F) to charities depending on their efficiency. The grade is based on the following two criteria:
- Program %: This is the percent of total expenses a charity spent on its programs in a given year.
Here’s an example CharityWatch uses on its site: “A Program % of 80% means that the charity spent 80% of its expenses on charitable programs. The remaining 20% was spent on overhead, which includes fundraising, and management & general.”
- Cost to Raise $100: This reflects how much it costs the charity to raise $100 in cash donations from the public in a given year.
Here’s an example CharityWatch uses on its site: “A Cost to Raise $100 of $20 means that the charity spent $20 on fundraising for each $100 of cash donations it received.”
Charity Navigator says it has ratings information on 1.6 million non-profits registered in the United States. That said, the site only rates charities that have generated at least $1 million in revenue for two consecutive years.
The site does a great job of rating non-profit organizations on how sustainable they are and for transparency.
Does it cost for donors to use Charity Navigator? No.
How they rate charities: Charity Navigator uses an overall score and star rating to rate charities. The site insists that its ratings aren't rankings, but they do score charities by evaluating two main categories:
- Financial health: Charity Navigator weighs the financial information found on charities' tax returns against seven performance metrics to come up with a score (0 to 10) to assess solvency, efficiency, capacity and more.
- Accountability & transparency: In addition to the tax return, Charity Navigator does a comprehensive review of the charity's website to see if it makes it easy for donors to find important information.
4. Avoid Red Flags
Consumer Reports says that when doing your research, you should be able to see at least three things on a non-profit organization’s website:
- Its mission
- A list of the board of directors
- The latest financial reports
If you can’t find those items on a charity’s website, it may have some transparency issues, among other things.
Clark says you never want to give your credit card or bank account information to someone over the phone. But also remember these three things:
1. Make sure you have the organization's name correct. Many fake operations will use a name very similar to a reputable non-profit's. If you're off by one letter or word, you could get scammed!
2. Avoid phone solicitations. "Never give money over the phone or on a street corner," Clark says. "If someone calls you to solicit you, tell them, 'Send me literature on your organization first, so I can look it over at my leisure.'"
3. Resist high-pressure sales tactics. Clark says if someone presses you to make an instant decision, the answer should be "no."
“You worked hard for your money and you’ve got to make sure it’s going where you really want it to go.”
What to Do If You Get Scammed
If you do happen to fall for a charity scam, it’s important that you know you do have some recourse.
When you call to report such a scam, make sure you share these bits of basic information:
- Organization/fundraiser name
- Phone number
- What the fundraiser told you
It’s easier now than ever to investigate an organization to see if it’s as effective and honest as it may seem. As a recap, here are the four steps to help you choose the best charities to give to:
- Decide what you're passionate about
- Find a charity that matches your passion
- Research the organization before you give
- Avoid red flags
If you do all these steps, you can have peace of mind knowing more about the organization before handing over your money.
In the end, giving is not about how big your bank account is but about how big your heart is. If you have other favorite ways to give back, let us know in the comments below!
More Clark.com Articles You May Enjoy:
- Best & Worst Veterans & Military Non-Profit Organizations
- Here's a Great Way to Give Stock to Kids
- People Are Making $400 a Month Donating Plasma
The post How to Choose the Best Charities for Your Donations appeared first on Clark Howard.