Season's Givings: How to Check On a Charity Before Donating
The Tuesday after Thanksgiving, known as Giving Tuesday, seems to kick off the year-end push for people to give to their favorite charities. This crazy year, with seemingly more people in need, you may be inclined to participate more than usual during this giving season. It seems like whenever there is a catastrophe, such as a hurricane, nefarious individuals try to take advantage of people’s wanting to help through sham charitable organizations. With the pandemic this year, we warn you to watch out for the shysters pulling your emotional purse-strings and we encourage you to do your homework before giving. Here’s how:
First off, some basics:
- Don’t ever give through prepaid debit cards or gift cards
- Don’t give in to pressure scammers try to push people into quick giving decisions
- Don’t donate by text
- Be very leery giving to causes through GoFundMe or crowdfunding sites
- Learn about the Charity’s mission and successes to make sure it aligns with what you want to give to
Beyond just the basics, I want to make sure the money I donate is spent predominately on the specific cause. The easiest way to check that is to visit one of a few charity rating sites. My favorites are either Charity Navigator or Better Business Bureau’s Wise Giving Alliance. The problem is there are over 1.4 million charities in the United States. While these sites will have information and ratings for the larger well-known organizations, they do not cover anywhere close to them all. For example, Charity Navigator only rates 9,000 of those 1.4 million charities.
If you cannot find rating information on the organization you are considering supporting, you are not out of luck. Certain states require charities to be registered to solicit donations in that state. For example, any charity (excluding religious, educational, political and governmental agencies) soliciting for donations in the state of Florida has to register with the Florida Department of Agriculture and Consumer Services. Florida has a basic looking, but really good, search tool called “Check-A-Charity.” It clearly reports revenues and breaks out spending between fundraising expenses, administrative expenses, and program service expenses (spending for its causes). You can also download forms filed with Florida, such as the registration application and sometimes financial information. This is a fantastic tool to dig beyond the organization’s website and pamphlets.
I especially pay attention to the expense side of the equation, looking to see what percent of a charity’s spending goes towards- fundraising and administration, and what goes to its causes, or “Program Services Expenses.” Obviously, as a donor, I prefer my donation to be spent on the actual cause, not on fundraising and admin. The Wise Giving Alliance suggest at least 65% of a charity’s expenses should go towards serving its mission but I personally think it should be even higher. The one possible exception, newly established smaller charities that are just getting going would reasonably have higher initial expenses.
When you are researching a charity, I can’t stress enough how important it is to get the exact name for the organization, as the often sound very similar to each other. For example, using Florida’s Check-A-Charity tool, I found a charity called “National Breast Cancer Foundation” that spends 76% of its expenses on its causes. I found another called “National Cancer Assistance Foundation” that only spends 30% of its expenses on causes. If you think that 30% number sounds bad, consider this next example. A charity called “United Cancer Support Foundation” that also solicits under the name “American Breast Cancer Support Organization” reports only 9% of almost $3 million in spending went towards its causes. They sound somewhat similar by name, but their use of funds is vastly different. Again, this highlights how important it is to get the exact name, and how important it is to check where you are donating money.
Unfortunately, just like with anything, there are both good and bad organizations in the charitable world. Just because a charity has a good name, a heartfelt story, and a website that emotionally pushes us to action, it is still important to do a little research before giving to make sure the organizations will be good stewards of your donation. Fortunately, with the available tools, a little bit of time and effort can go a long way in making sure your donation dollars are effectively supporting your cause.
This material is provided as a courtesy and for educational purposes only. All information contained herein is derived from sources deemed to be reliable but cannot be guaranteed.