During the holidays, people are inspired to give more generously to charities than any other time of the year.
In fact, more than half of respondents from an Ask Your Target Market survey a few years ago said they give to non-profits throughout the holiday season.
But whether you plan on giving a money donation or dropping off a new toy, trying to identify legitimate charities from irresponsible ones can be challenging.
That’s why we put together this helpful guide on how to evaluate charities on your own, including what factors to consider and what tools you can use to make the process simpler.
3 factors to consider when evaluating charities
Non-profit watchdog Charity Navigator recommends that, when assessing legitimate charities, you should consider the organization’s financial health, transparency, and measurable results.
1. Financial health
When reviewing different prospective places to donate, take a look at how much money they spend on programs versus administration costs.
While non-profit workers deserve to earn a decent salary too, you do want to see the majority of the organization’s funding go towards actual programs in the community, rather than towards fundraising.
Also, look at the organization’s sources of funding. Some rely almost entirely on grants from a single source, like from the government or another charity.
That can put them at financial risk if their grant or main source of funding falls through. Stronger charities have multiple sources of funding to see them through difficult times.
Another issue to keep in mind is CEO and executive pay. Some non-profit executives make well into the six and seven figures.
Depending on your views, you may decide to give to smaller charities, where salaries are more modest. And, more of your donation is likely to go directly to programs.
Legitimate charities hold themselves accountable and make their information available to the public.
Therefore, look for their annual funding reports, financial information, and form 990. That’s the form the IRS requires all non-profits to file annually on their websites.
If these documents are not available, that’s a red flag to keep in mind.
Also, do a quick Google search to find out what the organization has been doing within the community. That can give you a very clear view of what their role is and how the neighborhood views the non-profit.
When it comes to programs, look for real results.
Charities should be able to tell you what they have accomplished in years past. For example, how many homeless people they’ve permanently housed, how many shelter dogs have found homes, or how many meals their food bank has provided.
If you can’t find any numbers, or if the information is very vague, that may mean that they are not tracking their data. Or, perhaps they don’t actually have good numbers to report.
Resources to use as a charity guide
There are a number of resources to use to research different charities. The best part is that a team of professionals run these sites.
Most of these organizations provide careful audits of organizations’ finances, programs, and staff, and give them ratings based on their performance. They can be invaluable resources when looking for legitimate charities to support.
Charity Navigator is one of the best-known tools. You can search by organization name, or look for a group in your interest area that’s close to you.
Charity Navigator will also break down the organization’s expenses and accountability, then give them an overall rating.
Wise Giving Alliance
Search for an organization by name for an in-depth profile.
If a charity isn’t included, what does that mean?
While Charity Navigator and the Wise Giving Alliance are terrific resources, they are not inclusive of all charities that exist. Although they try to include as many as possible, they don’t cover many organizations.
Most of the non-profits covered by Charity Navigator, the Wise Giving Alliance, and other similar tools are large and established. They have been around for years and are well-known in the community.
Smaller non-profits and newer organizations that are just a few years old are often not included on these sites.
That doesn’t mean they’re not a good organization, or that they do not do worthwhile work. It just means they have not been around long enough for the sites to profile them.
If you’re interested in supporting a particular charity but they’re not on Charity Navigator or the Wise Giving Alliance, don’t cross them off the list.
Do your own research, instead. Evaluate their financials, transparency, and effectiveness on your own before making a donation decision.
Giving to legitimate charities
While it’s great feeling inspired to donate to charities this holiday season, do your homework to ensure they do good work in the community.
That way, you know your money will be used wisely to make a difference in the lives of your neighbors.
For more information about charity watchdog groups, check out our more in-depth article on the top three sites.
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