Make Charitable Contributions Safely

When you donate money to a charity, you want to be sure that it ends up furthering the cause you intend to support. Here are six steps to take when donating to ensure the charity delivers on its promises.

1.    For your donation to be tax-deductible in the US, the charity must be a registered, qualified non-profit. Search for the organization’s name in the Internal Revenue Service (IRS) database of tax exempt organizations.

2.    Check out the organization’s website. Look for the organization’s mission statement, then find evidence of outcomes or impact of the organization’s work that align with its mission. Is the information updated and current?

Does the organization publish an annual report or other documentation of its claims of effective use of funds? Read accounts by persons served by the organization, but also look for statistics.

Check the staff’s contact information. Is it possible to identify actual persons you could call or email? Read their biographies to get a feel for the types of people intimately involved in the work of the organization.

3.    How do others feel about this organization? While you do not necessarily have to agree with people who offer either glowing testimonials or scathing negative reviews, it is useful to read both.

The Better Business Bureau (BBB) issues reports based on 20 Standards related to governance, finance, effectiveness, and informational materials about organizations for which they have received complaints. (Charities can also request a BBB evaluation. Those which meet all 20 Standards are then display the BBB National Charity Seal.)

Several independent organizations monitor the spending patterns of charities. It is felt that reasonable organizations spend no more than 30% of their income on running the business (salaries, office expenses, fundraising, and marketing). The charity should put at least 70% of donations toward the organization’s mission. Here are places to check how the charity you plan to donate to will use your dollars.

Charity Navigator shows the percentage of the organization’s budget spent on everything not related to its mission for organizations on their alphabetical listing. The website has a separate list of charities their experts have various levels of concerns about.

Charity Watch is like Charity Navigator but is organized by category rather than alphabetically. This can be helpful if you look for alternatives to the charity you were originally thinking of.

GiveWell is a VERY picky site. They create an annual short list of top global charities in the healthcare and poverty reduction arenas that are evidence-based and under-funded. This is useful if you want to donate where funding would be most effective.

GuideStar is perhaps the best-known source of information about charities. Free registration offers you tons of information on nonprofit organizations.

4.    From your research in steps 2 and 3, write a list of questions you would like answered about the organization.

Charity Navigator has a great list of questions that each organization should be able to answer, either through online documentation or by phone call or email.

5.    Contact a real person by phone or email and get answers to your questions. Follow up if you don’t understand an answer or need more depth.

6.    If you are planning to donate online, take these extra safety precautions.

·         Don’t ever consider giving your financial information through a website unless it is “secured.” You can identify a secured website by the letters in front of its URL. Secured websites begin with “https” where the “s” stands for “secured.”

·         Give directly to your desired charity instead of to a third party who is collecting donations “to be sent to” it.

·         Protect your personal information. Read the website privacy policy. Find out how the charity says it will use the information you provide. They should give you an “opt in” choice to allow them to disclose your information to other organizations. Find out if they place “cookies” on your hard drive.

·         Print out a paper record of the confirmation screen (or confirmation email) that your donation was received. Put this with your tax records.

Most charities are reputable and strive to improve the human condition. Don’t refrain from donating to charities. They need our support. Just be sure you donate safely.