Give Smart - How to Choose a Worthy Charity
The numbers of those in need are staggering, and the call for charitable giving is always amplified by headline-making events like conflicts, hurricanes and earthquakes. As the call to voluntarily invest in the well-being of others seems to get louder and more urgent, you need to know not only which charities are worthy, but also the ones which will be able to maximize your contributions.
Just What is a Charity?
The IRS defines a charity as a non-profit organization whose purpose is to provide relief for those who are poor, distressed or underprivileged. These groups receive donations to advance education, religion, science, reduce neighborhood tensions or build up deteriorating communities. The webpage at www.irs.gov/charities-non-profits provides comprehensive information about charities.
A charitable donation is a voluntary contribution made without getting or expecting to get a substantial benefit in return. Charitable donations made to a federally-registered, non-profit charity are considered eligible for a tax deduction. If you receive something in return for your donation, like a dinner ticket, only part of your donation will be tax-deductible. Your contribution of money or property, such as clothing or a car, may be used to reduce your taxable income as a “write off”, but only if it goes to a charity the IRS recognizes as tax-exempt, classified as a 501(c)(3) organization.
The IRS sets guidelines for organizations to qualify for tax-exempt status and assigns each a Federal Tax Identification number. If a tax-exempt status is a priority for your decision to contribute, you may verify an organization’s status on the IRS website, by asking your tax consultant or by requesting to see the group’s certification.
Reputation Matters
To really understand if a charity aligns with your ethics and will be a good steward of your gift, you must do your research.
Just because an organization is recognized by the IRS as a non-profit doesn’t guarantee its merits or honorable principles. To really understand if a charity aligns with your ethics and will be a good steward of your gift, you must do your research. There are many websites that will help you measure an organization’s fiscal responsibility. Guidestar.org bills themselves as “the most complete source of information about U.S. charities and other non-profit organizations.” Another useful source is charitynavigator.org, which offers objective ratings to help find worthwhile charities. Both sites encourage you to visit a charity’s website, read the organization’s annual report and to be wary of any organization that uses pressure tactics or won’t take no for an answer. A worthy charity clearly states its mission and lives up to that statement. The organization you choose should be accountable, transparent and have easily accessed information.
Here are some things to look for when researching worthy charities:
- An organization that has independent voting board members
- Assets that are not diverted
- Audited financial records prepared by independent accountants
- An easy-to-find, publicly available salary for the charity’s CEO
Worthy charities make it easy to access their donor policy, revenue contributions, gifts and grants, membership dues, fundraising events and assets. It should also be easy to find their program expenses, administration costs and payments to affiliates.
Choosing a charity to contribute to should depend on your own unique values. Celebrity endorsements are another consideration to make when choosing a charity. Star-powered organizations include the Michael J. Fox Foundation for Parkinson’s Research and People for the Ethical Treatment of Animals (PETA). If you want to keep your donation closer to home, talk to a neighbor or church member and ask for good recommendations.
If you can’t find a charity that supports your cause or one that you would trust to be a good steward of your gift, consider starting your own crowdfunding campaign using social media platforms. Asking your online connections and contacts to contribute to a cause you’re passionate about is one approach. Gofundme.com is another easy-to-use tool for crowdfunding, although it’s worth noting that the site collects five percent from each donation and charges an additional three percent for processing.
It’s OK to Donate Your Time, Too
So, you picked a cause you think is worthy but discover the organization doesn’t have audited financials or doesn’t conduct fundraising events due to a lack of staff. Instead of donating money, you can always volunteer your time. In that case you should contact the organization and inquire about their volunteer policies. You may be asked to participate in training or undergo a background check. Be realistic in how many hours you can commit to volunteer work. Activities can range from stuffing envelopes to serving as a member of the board of directors. The Corporation for National and Community Services advises that “volunteers who show up late, cancel at the last minute and produce limited results encumber the charity, costing it money and preventing it from fulfilling its mission. A reliable volunteer with a strong work ethic can go a long way towards helping a charity meets its goals.”
As charities meet their goals, new ones are set. The numbers of those in need are staggering and the call for charitable giving is always urgent. By following these guidelines and doing a little research, your contributions can make a bigger impact to the causes you care about most.