With charitable giving at an all-time high, American individuals are donating more every year, according to the Giving USA 2018 report.
Yet, with numerous awareness campaigns, intricate cause-related marketing and even the ever-present fraudsters, choosing the charity to receive your donations has turned into a challenging decision-making process.
Today, more giving people are looking toward a set of guidelines to identify the most effective charity.
“Donors and funders are becoming ever more sophisticated in their approaches to making gifts as they draw on the increasing availability of new data, new technology and new ideas,” said Rachel Hutchisson, chair of The Giving Institute, in a statement following the release of the Giving USA report.
Knowing how to vet charities can help identify whether donations are going toward a charity’s mission or to secondary agendas.
While these are not the easiest to measure, there are tools and steps one can take.
Research before giving
If you know you want to donate, but you don’t know where to start, try using one of the top charity research watchdogs: GuideStar, BBB Wise Giving Alliance and Charity Navigator.
Whether you want to give back to a Santa Clarita Valley charity or one located across the country, these services allow you to search by name and learn about a charity’s mission and its operations.
The online services, some with plenty of free tools, contain data on over 1.8 million organizations, including over 300 from the SCV. While GuideStar does not provide evaluations, BBB Wise Giving Alliance offers a review on whether a charity meets accountability standards and Charity Navigator displays ratings on financial health, accountability and transparency.
Finding out an organization’s legitimacy is part of the research process. The Federal Trade Commission recommends these services to check the status of each charity. Donors are advised to ask for detailed information, such as the address and telephone number to avoid fraudsters. For security and tax purposes, credit card or checks payable to the charity are best, rather than sending cash donations.
The important part, said Sara Nason, head of Consumer Innovation and Engagement for Charity Navigator, is to begin the process by researching the list of charities whose mission best matches your philanthropic priorities.
Once you have learned about one or more charities, dig deeper to examine the charity’s finances and find out if the organization is accountable and transparent.
For starters, “make sure the organization is a bona fide, tax-exempt 501(c)(3) public charity,” said Nason. If you aren’t sure, you can ask for the organization’s employer identification number and check its status using services like Charity Navigator.
Holly Schroeder, president and CEO of the SCV Economic Development Corp., who has worked with nonprofits, said one way to track down an organization’s finances is to review its Form 990, a nonprofit’s filing document with the Internal Revenue Service.
“Forms 990, which are equivalent to a tax return for nonprofits, gives donors information about the financial health of an organization and it answers questions on not just about the income and expenses but also if it has a good policy in place, like a conflict-of-interest policy,” she said.
You’ve done your research and have settled on your top organizations, but is that enough?
Hands-on involvement and frequent conversation with the charity of your choice can help you better understand the organization’s goals and challenges.
Charity Navigator’s “5 Steps to Informed Giving” suggests that donors have these conversations.
“Such conversations will give you insight into how well the charity knows where it stands and where it plans to go,” step three reads. “Charities unwilling or unable to have this conversation may not deserve your support.”
Follow your investment
In its final step, Charity Navigator recommends to follow up with the charity in six months to a year to track how your donation has been utilized.
How the organization communicates back in providing a progress report can demonstrate their efforts with yours and others’ donations.
“Once you are assured that the charity is making an impact, make a commitment to support their work for the long haul,” said Charity Navigator.