Give Wisely this Holiday Season

It’s the holiday season and the spirit of giving is in the air. From the familiar sound of a Salvation Army bell ringer asking for your spare change, to local food and clothing drives, there are many simple ways you can lend a helping hand. Yet, what about when you’re looking to make a more significant charitable donation?How can you be sure that the organization you donate to will use your financial contribution in a way with which you are comfortable?

There are some key areas to consider regarding how a charity carries out its mission. Programs and services provided, amount spent on professional fundraisers, executive compensation, and how all of this is reported to the IRS can give you some insight as to the internal structure of an organization you would be supporting. Name recognition of a charity is not enough of an indicator that it might be deserving of your contribution. There have been well-known charitable organizations, that upon closer scrutiny, were proven to be less than effective in how they managed funds and furthered their cause.

When determining if an organization is one you’d like to consider supporting, a good place to begin your search for more information is by using online charity vetting tools. The following online sources can help you sort through the vast amount of choices and make an informed decision.

  • Charity Navigator – Charity Navigator evaluates and rates 501(c)(3) organizations who have generated at least $1 million in revenue for two consecutive years, are U.S. based, have been in existence for at least seven years, and have met other minimum threshold criteria. They do not evaluate newer nonprofits, stating on their website “We believe it’s unfair to hold new nonprofits to the same benchmarks expected of established organizations. Newer organizations understandably incur abnormally higher overhead costs in their first few years of existence as they begin their operations.” Once an organization meets their criteria, Charity Navigator analyzes details such as funding sources, spending, financial health, accountability and transparency to assign a numerical rating up to 100.
  • The Wise Giving Alliance – The Wise Giving Alliance is the Better Business Bureau’s own charity vetting service. They use a set of 20 standards to evaluate national charities by looking at the organization’s governance and oversight, finances, fundraising, informational materials and the effectiveness the charity displays in achieving its mission. For the Wise Giving Alliance to do an evaluation, they either receive inquiries regarding the charity, or the charitable organization initiates the request to be reviewed. Local and regionally soliciting organizations can be evaluated by the BBB in their area.
  • CharityWatch – According to its website, CharityWatch refers to itself as “America’s most independent, assertive charity watchdog.” They perform in-depth evaluations of audited financial statements, tax forms, annual reports, state filings and other documents. Using this information, they calculate the percent of total expenses a charity spent on its programs in the given year analyzed, and how much it cost the charity to bring in each $100 of cash donations. A letter grade from A+ to F is then assigned based on these calculations.
  • GuideStar – GuideStar provides data on over 1.8 million IRS-recognized tax-exempt organizations, offering access to significant information on each one. Balance sheets, revenue and expense data, IRS Forms 990, annual reports, full listings of CEO, board chair and board members, along with complete organization contact information are all available for review.

With so many different organizations competing for your donations, it’s important to do your research first. In addition to the existence of mismanaged charities, there are scammers and organizations with sound-alike names that can easily be confused for another. By taking advantage of these online vetting tools, you can find a charitable organization that is furthering a cause you feel good about supporting and has proven they are able to manage donations properly. Please contact us if we may be of any assistance in this process.