How to Vet Charities
If you’re like most Americans, you give generously to the causes that matter to you, but in giving that financial help you want to make sure the charities you donate to also effectively and efficiently spends those funds to achieve meaningful change.
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How to Vet Charities
Three out of every 10 dollars in annual contributions to charities are made in the month of December; 10% of annual giving occurs in the last three days of the year.1
Though many Americans may wait until the end of the year to donate to charitable causes, they are exceedingly generous, with 2021 charitable contributions of almost $327 billion, or 67% of total giving.2
If you’re like most Americans, you give generously to the causes that matter to you, but in giving that financial help you want to make sure that the charity you donate to also effectively and efficiently spends those funds to achieve meaningful change.
There are steps you can take to ensure your donations have real world impact.
Research, Then Donate
Information regarding a charity’s efficiency and effectiveness is readily available and generally free. Here are nine ways to vet a charity.
- Study its history. Find out how long the candidate charity has been around and who supports them. While the involvement of highly respected individuals is no guarantee of a great charity, it helps knowing that people with public reputations are comfortable with their involvement in the charity. Research news stories on the charity.
- Visit its website. This is a great way to learn about how a charity is putting their money to use.
- Contact donors and volunteers on social media. Ask them what their experience has been with the charity and their level of satisfaction with the charity’s efforts.
- Review its finances. Examine a charity’s Form 990 and financial statements. Determine whether a charity has submitted their financials to an independent audit—a good sign of transparency.
- Use independent evaluators. Take advantage of some wonderful independent charity evaluators that vet and score hundreds of charities, including Charity Navigator, GuideStar, BBB Wise Giving Alliance and CharityWatch.
- Focus on fundraising efficiency. Determine what percentage of funds raised goes to directly benefiting the charity’s mission versus funds spent on administration, fundraising and lobbying. Look for a minimum of at least 70%.
- Zero in on performance outcomes. Many charities appear to be actively involved in effecting change with little real impact. Non-governmental organizations are a good example of spending years in Africa driving shiny new SUVs around, but having very little positive impact.
- Consider an entry-level volunteer position. That will help you get to know the charity and whether it’s worth your investment.
- Confirm its tax deductible eligibility. The IRS offer a free search tool to determine if a contribution made to a candidate charity will be tax deductible.
First and foremost, when preparing to give of your hard-earned money and/or valuable time, follow your heart with a charity that supports causes you are passionate about. Just be sure scammers or less-than-truthful organizations aren’t taking advantage of your generosity.
Please reference disclosures at: https://blog.americanportfolios.com/disclosures/