On the heels of Black Friday, Small Business Saturday, and Cyber Monday, a partnership spearheaded by the 92nd Street Y in New York City launched Giving Tuesday, turning the idea behind all those one-day consumer events on its head.
The impulse to give something back around the holidays is only natural, even if today’s economy means many of us have less to give than in the past. The lackluster economy has taken a toll on charities, too; they say they depend on donations more than ever due to cutbacks in government spending.
No matter how much you give, these tips will help you make sure you get the most bang for your charity buck.
1. Read expert (and non-expert) reviews. Sites like CharityNavigator.org, CharityWatch.org, GuideStar.org and FoundationCenter.org look at charities’ financial records and corporate governance standards. They rate them based on things like how much money they spend on fund-raising and if they have rules to prevent conflicts of interest among their leaders. The Better Business Bureau’s Wise Giving Alliance uses a 20-point list of standards that includes fundraising practices, how much they spend on their programs, the quality of governance, how forthcoming they are in their public information and how they measure their effectiveness, says H. Art Taylor, president and CEO of BBB Wise Giving Alliance.
GreatNonprofits.org offers a different way to take a look at charities — through reviews written by ordinary people. It’s not the kind of hard-numbers information you’ll get from either the BBB or the evaluation sites, but it’s a way to get a feel for a nonprofit’s “voice” and a sense of where it fits into its community.
2. Check efficiency. The most common metric for gauging charities is how much of every dollar a charity brings in goes towards their cause, as opposed to fund-raising or other administrative costs. A general rule of thumb for large charities is that 75% of all donations should go towards the cause, says Sandra Miniutti, vice president at CharityNavigator. The BBB’s threshold is a little lower because its network of local bureaus also evaluates smaller charities, which tend to spend proportionately more on overhead. It stipulates that every charity should spend at least 65% of its expenses on programs, Taylor says.
3. Check with the taxman. If you’re considering donating to a charity that’s too small or too new to be on the radar of these sites, dig into their 990, where all of this information about finances and governance is recorded. This is the form nonprofits have to file with the IRS, and you don’t have to be an accountant to get at least a general sense of how the organization handles its money and its organizational practices.In fact, Miniutti says just asking for this paperwork can be a good way to weed out sketchy charities. They’re required by law to make this information available to the public, so excuses or resistance add up to a big red flag. You can find 990s on your own at the National Center for Charitable Statistics.
4. Don’t call me, I’ll call you. Taylor advises against giving a donation in response to a call you get from a telemarketer. Telemarketing campaigns are typically an expensive way for charities to raise money, so much so that the outside telemarketing agencies often pocket most or even all of your donation — probably not what you have in mind for that money. “If you really like what you’re hearing from the telemarketer, go directly to the charity and give them the money,” Taylor says.(MORE: How Bad Mergers Are Killing Innovation)
5. Be suspicious of solicitations that come out of the blue. Solicitations that come via snail mail should say what the charity does in clear and specific language. You should be able to get an idea of what they’re going to do with your money after reading it. If not, move on.
If you get a plea to donate via snail mail, make really sure the charity is what it claims. Taylor says shady groups will adopt similar names as nonprofits or build fake websites to con people into giving up cash. Use similar vigilance with door-to-door or street solicitations. Before giving them any money, Taylor advises, get the charity’s full name and mailing address, and find out if your contribution is tax deductible and if the charity is licensed in that state.