When you give to charity, you want to know that your money will be used wisely. Many donors make this determination by comparing what a nonprofit spends on programs to what it spends on fundraising and administration. But giving wisely is both more complicated and simpler than just looking at financial ratios.
It's more complicated because many things—mission, size, location, and age, for example—affect an organization's finances. It's more complicated because budget numbers don't tell you how effective a charity's programs are. Fiscal responsibility is important, but it's only part of the story when you're evaluating charities.
Giving wisely is simpler because it boils down to two questions: "Does this charity do work I want to support?" and "Does this charity do what it says it's going to do?"
Here are GuideStar's recommendations for finding the answers.
- Clarify your values.
Ask yourself: "What's important to me?" The environment? Education? Hunger? Animal welfare? Helping sick children? Do this before you open your checkbook, volunteer your time, or look at that letter from a charity.
- Identify your preferences.
- Where should the charity do its work—in your neighborhood, region, the nation, or internationally?
- Do you want to support a large or small charity? A new organization or an older one?
- Search the GuideStar database or one of our partner sites to find charities that meet your criteria.
- Focus on the mission.
- Look at the description of each charity's mission in its GuideStar report, on its Web site, or in its literature.
- Find the nonprofits that fit best with your values.
- Eliminate organizations that don't meet your criteria.
Now you're ready to look more closely at the organizations that are left.
- Verify a charity's legitimacy.
- If you find a charity on GuideStar or one of our partner sites, you know it's legitimate—all nonprofits listed found GuideStar and on our partner sites are registered with the IRS or have given us proof that they meet the IRS criteria for tax-exempt organizations.
- If you can't find the charity, ask to see its IRS letter of determination.
- If the organization is faith based, ask to see its official listing in a directory for its denomination.
- Get the cold, hard facts. A reputable organization will:
- Define its mission and programs clearly.
- Have measurable goals.
- Use concrete criteria to describe its achievements.
- Compare apples to apples.
Be sure to compare charities that do the same kind of work. See if stakeholder reviews are available for the charities that interest you. You can find charity reviews on both GuideStar and GreatNonprofits.
- Avoid charities that won't share information or pressure you. Reputable nonprofits:
- Will discuss their programs and finances.
- Don't use pressure tactics.
- Are willing to send you literature about their work or direct you to a Web site.
- Will take "no" for an answer.
- Trust your instincts.
If you still have doubts about a charity, don't contribute to it. Instead, find another nonprofit that does the same kind of work and with which you feel comfortable, then make your donation. More than 1.2 million charities are registered with the IRS, so you have wide field from which to choose.
In the end, there's no right or wrong answer to which charities you should support. There's only what's right and wrong for you.
GuideStar Partner Sites
Several of GuideStar's partners help donors research and give online to charity.
GuideStar, November 2009
© 2009, GuideStar USA, Inc.