Choosing an effective, trustworthy charity
Monday, 29 July 2019
Charitable giving offers an excellent way to make a difference in the world and leave a legacy for future generations.
Those with generous goals and healthy assets can choose a number of philanthropic paths, from establishing a private foundation or charitable trust to simply making direct personal donations to individual charities.
If you prefer contributing to established philanthropies, figuring out which organizations to support may feel daunting.
By following a few guidelines and using easily accessible tools, however, you should be able to transform your philanthropic drive into meaningful action by choosing a reputable, well-managed charity that aligns with your goals.
Choose your cause
If you haven't done so already, consider what you want your giving to achieve. Do you aim to provide meals, medical care and education for children living in poverty? Do you want to support efforts to improve the environment, lift people from homelessness?
Nonprofit-database operator GuideStar suggests you also decide where you want your dollars to go geographically, and the size of the philanthropy you wish to support. Do you prefer helping local, national or international organizations, or some combination?
You can start exploring relevant philanthropies by checking with charity data organizations.
Charity Navigator, for instance, which follows and ranks thousands of nonprofits, organizes lists of high-performing philanthropies by issues, such as veteran support, religious tolerance, refugee aid, tuition assistance, civil rights, mental health, famine and drought relief, and specific humanitarian crises.
Conduct due diligence
Once you have narrowed your focus to certain types of philanthropies, it's time to perform some research to make sure you choose high-quality, trustworthy organizations that deploy their funds in ways that appeal to you.
You might check charities' websites for details on their activities, finances and personnel, but don't stop there.
Organizations like Charity Navigator, GuideStar, the Better Business Bureau Wise Giving Alliance and GreatNonprofits can provide information to help give you confidence that you're financing ethical, accountable, effective endeavors.
To invest in a philanthropy that possesses the means to carry out its mission and signals a commitment to ethical, responsible behavior, Charity Navigator recommends you make sure the charity is financially strong and efficient, practices good governance and offers transparency into its activities.
That organization rates groups on financial performance metrics such as the percentages of total expenses spent on program, administrative and fundraising costs, among others, and on accountability measures such as independent voting board members, use of an independent accountant to prepare audited financials, transparency on CEO salary, and conflict-of-interest and whistleblower policies.
The Wise Giving Alliance indicates whether charities have met 20 different accountability standards covering governance, finances, fundraising (including donor privacy) and effectiveness measurement.
GuideStar allows database users to apply various search filters, offering the opportunity, for example, to explore only those organizations that have provided information on diversity, equity and inclusion.
You can also check government resources for information on charities.
Check with your state, or the charity's home state, to see if the organization has filed any required registrations or disclosures; most states require either charitable solicitation registration, disclosure statements or both.
Search the IRS website or charity databases to confirm the organization you're considering is tax-exempt.
If the philanthropy you're considering hasn't complied with state filing laws, Charity Navigator partner Harbor Compliance suggests you talk to the organization to find out why, as the violation may not necessarily signal a serious problem.
The Wise Giving Alliance, which asks charities to supply information via questionnaire, warns donors to avoid or be careful in giving to "nondisclosure" organizations. Among other tips, the group also advises donors to check the charity's name to make sure you're giving to the right one.
Consider the impact
Philanthropists want to make sure their charitable gifts will go to work to achieve certain goals.
Check with the nonprofit itself and the charity rating and data organizations to see how the philanthropy spends its money and how effective it has been in serving its constituents.
GuideStar, for one, allows nonprofits to explain on their profiles how they measure their results. And, as noted above, Charity Navigator details how much of a charity's spending goes toward its programs.
The BBB's Wise Giving Alliance notes whether charities have policies that require effectiveness assessments and whether they submit effectiveness reports to their governing bodies.
A faster route
If you don't have the time to dig deep into a charity's financials and activities but do want to dig deep financially, some of the philanthropy data services provide helpful shortcuts.
GiveWell, a nonprofit that analyzes charities to find "outstanding giving opportunities," says it conducts deep research "to determine how much good a given program accomplishes" per dollar spent.
The organization focuses on only a few philanthropies that it considers to be standouts so it can suggest "high-impact" opportunities through its top charities list.
With careful thought and research, conscientious philanthropists can give with confidence that their donations will provide effective support for the causes they consider most important.
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