How to get the most bang for your charitable bucksOz Spies
After fifteen years in the nonprofit sector, ten of those working for a foundation, I’ve had dozens of opportunities to experience, first hand, the inspiring work of nonprofits in the US, from homeless shelters to after school arts programs, and to see the impact generous donations of all sizes can have on their work. But how do you know that the nonprofit sending you a solicitation letter is the right place for your family’s charitable dollars?
There are over one million charitable organizations in the US. That’s a huge number of organizations to sort through. And, every day, even more groups file for 501(c)3 status with the IRS. While, certainly, there’s a place for some of these small, focused nonprofit organizations, there are others that are duplicative – does a neighborhood really need three food pantries on the same block? – and even a few that are scams, like those trying to make money off of a national tragedy.
Here are five tips for assessing a nonprofit organization before making a donation.
Ask others for advice
If you’re looking for nonprofit organizations that address a specific issue in your community, it’s likely that your local community foundation or United Way can offer some suggestions. These organizations often interact with hundreds of local nonprofits, and have a good sense of the local landscape. They may be able to recommend a few homeless shelters to you, or suggest that you check out specific organizations that have a strong track record building early literacy, if that’s your interest. Your place of worship, friends, or neighbors may also know strong nonprofits in the community or around the world.
Start with your time
One great way to get to know a nonprofit organization: spend time there as a volunteer. You’ll have a chance to participate in their good work, and get to know it before writing a check. To find volunteer opportunities, including some that are great for families, visit the HandsOn Network.
Do your homework
Check the organization’s website, of course, and then dig a little deeper. If they’re local, and your seriously considering a donation, call and see if your family can take a tour and learn more about their work. Or, see if you can have a conversation with the organization about its work. You might start with questions like these:
- Why was your organization founded and created? What unique role does it play in the community or issue area it addresses?
- What does success look like for your organization?
- How does your organization measure its impact?
- How do you know you’re making a difference?
- How do you work with other organizations in the community and in your field?
- How would you use a donation of $500 (or another amount)?
- What’s your greatest challenge?
- How can I help with your work, in addition to making a financial donation?
Follow the money
After looking into an organization’s programs, check out their financial status. Many organizations post some financial information on their website, so you can see things like where their donations come from, and if their expenses far outweighed their income last year. You can also look at an independent evaluation system, like Charity Navigator, that assesses organizations’ fiscal health. If you want more information, check out Guidestar, where you can see an organization’s 990 (the paperwork they have to file with the IRS). Note: if you can’t find an organization on Guidestar, the group may not have nonprofit status in the US, so you may then want to look very, very, very carefully at the group before giving them any cash.
Most established nonprofits do have administrative overhead – they’ve got to keep the heat on in the domestic violence shelter, and pay someone to keep their finances in order – and investing in this can be an important way of supporting an organization’s overall work. Effective internal financial and donation systems help keep programs running, and make sure that donations, like yours, are being used for their intended purpose. A general rule of thumb is to look for organizations in which no more than 30% of expenses are for administration and fundraising.
Pool your dollars
Many of us make lots of small donations – we give $25 in response to a friend running a marathon for charity, or $50 to an emailed solicitation. While it can be great to learn about a variety of nonprofits, I find that supporting fewer charities works best for our family. We prefer to write a few (slightly) bigger checks to organizations we really believe in, ones that are addressing the issues we care about most, and then to help each of our kids make one or two smaller donations to groups that matter to them. It makes me feel like our money has a greater impact, and, well, frankly, I don’t want to encourage organizations to send us any more mail solicitations or newsletters. You might consider thinking about what matters to you, whether it’s providing clean water or keeping the arts in public schools, and focus your money there.