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How to Research Charitable Organizations

Avoid Donating to Irresponsible or Bogus Charities

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Updated June 13, 2014

donation check

Spend some time reviewing charities before you spend your hard earned money to help them.

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There are many times in our lives when we decide to donate to charities that need our money to do their good work. We may feel moved to donate to a charity that does research in a certain health area we are interested in. When someone we loved or respected dies, their family may ask for donations in lieu of flowers. Tragedies often trigger creation of new charities, as when a young person dies a tragic death. Sometimes we want to donate simply because we are asked to. And, of course, the end of the year, during the holiday season, we consider our gifting at the same time we plan for completing the tax year.

There are three important planning steps to determining the right charities to donate to:

  1. Develop your giving goals.
     
  2. Make sure a charity is bona fide; that is, that it exists to truly help the organization or individual it is meant to help.
     
  3. Research the strength of a charity's fiscal responsibility and its track record for using donated money to address the goals that are of interest to you.

Here is information to help you with these steps:

1. How can you choose which charities to donate to?

The best way is to set some giving goals - from the type of charity to the scope of its reach. For example, do you want to donate to help research treatment options for a certain disease? or perhaps you want to help pay for medical care for a child who has a rare disease? Here is how to determine what kinds of charities you want to support.

2. Confirm the authenticity of the charity.

There are tens of thousands of charities that ask you for money, but not all of them are real charities, meaning, some are only set up to take your money, and not to truly help your cause. This is particularly true when a tragedy has taken place, such as those scammers who claimed they represented families who lost a child at Sandy Hook, or which claimed they were assisting people who lost their homes after Hurricanes Katrina and Sandy.

If a charity is new to you, or if you have received some sort of solicitation by phone or email, do not simply assume that it is safe to donate - or even to link to the charity from an email link or a FaceBook page or other social media. You might be giving money to someone who doesn't deserve it, and even worse, if it's online, you may pick up a computer virus, too.

Therefore, it's important to confirm that you are donating to a bona fide charity, one that is authentic and will use your money well.

In some cases you can know whether a charity is "real" by confirming its IRS or CRA status. But don't ask the charity, and don't simply accept a statement on its website since we know that not all websites have credible information.

Instead check with either of these resources to confirm a charity's authenticity:

  • The Better Business Bureau will help you search for a rating on a specific charity. You won't be able to search for a group of charities with one focus, but you can find out how individual, even local, charities are rated or whether the BBB accredits them.
  • The National Association of State Charity Officials provides links to the person or office in each state that can help you determine authenticity.

3. How well does the charity address your goals?

There are two important aspects of how well a charity is run that will be of interest to us as donors.

First, take a look at its fiscal responsibility. You want to know how well run a charity is; whether they waste their money, or have fulfilled their promises.

The second is to be sure they focus on the aspects you think are important. We all have different reasons for donating, whether we're donating to health-related charities or the local high school band. When it comes to health-related charities, it's important to learn enough about them to be sure they work toward the same goals as you have.

For example, both my grandmother and my mother died of Alzheimer's disease, so I know I probably have some genetic tendency toward developing Alzheimer's myself. My goal, then, is for my donations to go toward research to find a cure, or at least a highly effective treatment.

But in doing my research for the best Alzheimer's focused charitable organization to donate to, I learned that they don't all do what they say they plan to do. In one case, I realized how much money and effort was going toward paying other organizations to fund raise for them. Others say they are focused on research, but in some cases I learned that less than 20% of their donations actually go toward research! Would you think twice about donating to a charity that said one thing but showed a track record of something else? I certainly did.

Here are two websites that can help you check both fiscal responsibility and a charity's real spending vs the focus it claims:

  • Charity Navigator allows you to search by the name of an organization or by the disease or condition you hope to support. It allows for some very deep research into the financials, efficiency, cost of administration and more. It also provides a list of all 4-star rated health-related charities (4-stars are its highest ranking.)
     
  • GuideStar collects information about non-profit organizations and makes it available to the public through its website.  Included is a charity evaluator, among many other offerings.

Bottom line:

You have worked hard to earn the money you are ready to donate. Be sure that when you give your money away, you do so in a considered fashion, to groups or individuals that will be good shepherds of your donation.

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