When you give money to a charity, it can be tough to know what happens to your donation after it’s left your wallet. Will it go directly towards purchasing a new cow for a family in Kenya, as you’d been told—or will your hard-earned money all be squandered bankrolling the sushi buffet for the organization’s wealthiest donors?
You may not see your money again, but there’s no reason you shouldn’t consider your donation an investment in the world of social good. And as with any other investment, you’d like to make sure that you’re getting value for your contribution. So how can you be sure that the charity you select will use your donation wisely?
“Use your head and your heart,” says Rich Cowles, executive director of the Charities Review Council. “It can be a more satisfying experience if you do a little bit of research.”
Here are five ways to ensure your donation will make a difference.
1. Become active in the giving process. It’s easy to give to the Salvation Army at Christmas when volunteers are ringing the donation bell outside of every shopping center, but you may need to work a little harder to find some other organizations that fit your interests. “Think about a legacy and what you’d like to support,” says Cowles. “We encourage people to make a budget for their giving and figure out what kinds of causes interest them, then find charities that support those causes.”
Many nonprofits’ websites provide great overviews of their missions, but if you’re not sure where to start, several online resources, including Razoo, Charity Navigator, and Network for Good, can provide you with detailed information on specific nonprofit groups based on your particular interests.
2. Study financial statements. If you’d like to learn how a nonprofit is spending its money, you can download the group’s 990 tax forms from Guidestar. “If you still have questions, ask the charity for a copy of its most recent, audited financial statements,” says Jonathan Huston, the Chief Communications Officer for the nonprofit group Physicians for Human Rights. “These should be available upon request.”
Ideally, at least 70 percent of the program’s budget “should be going to the program, as opposed to fundraising and management,” says Cowles.
There are always exceptions to the rule: some non-program expenditures, such as strategic planning, board development, and technology expenses, can help a nonprofit to work more effectively in the long run, even if it’s not likely to see an immediate return on the investment, but an overindulgence in administrative and fundraising expenses should raise red flags. It’s also helpful to know how much of their budget nonprofits are spending on programs, rather than stockpiling for the future. “Donors want their contributions to solve current problems, not be set aside for later,” says Cowles.
3. Compare what they say to what they do. Many nonprofit groups have Web sites and brochures filled with heartwarming stories of the people they’ve helped—but if you really want to know if a nonprofit is making a true impact, it’s worth looking beneath the surface. Closely examine the group’s annual reports for the last two or three years, and measure its accomplishments against its stated goals to see how well they match up. “Can you see that they made progress on their prior goals?” asks Cowles. “If not, what are they doing about it?” If it seems like a group is all talk and no action, you may want to reconsider whether it will make the best use of your donation.
4. Take advantage of online resources. Muddling through facts and figures can be a frustrating process, and it’s hard to tell how successful a nonprofit is from its own reports. Luckily, several online services are available to sort through all the complicated data and share details of nonprofit groups’ success rates on a variety of subjects. Charity Navigator reports on the financial health of more than 5,300 nonprofits in the United States, sharing details of how each organization’s budget is spent and providing ratings on their financial efficiency. Another Web site, Guidestar, provides access to nonprofits’ tax records, and more details about their mission, programs, and services
And when all else fails, just try your trusty search engine. “For additional background on the charity and its leaders, Google them,” says Hutson. Though Google search results should never be taken as gospel, examining a charity’s search results can help you discover what people think about it, whether good or bad.
5. Volunteer. There’s only so much you can learn about an organization from reading about it. “For the real scoop, consider volunteering,” says Hutson. “That will give you a clear picture of the charity’s management and values from the inside out.”
Many national groups have local chapters in cities all around the United States that welcome volunteers. Some international aid groups, such as HOPE International, even offer their donors the opportunity to travel to one of their international offices, where they can meet with staff members and see the difference the group is making first-hand. By sharing your time with the nonprofit, you’ll develop a new level of connection with the people you’re helping—and hopefully come home with a newfound respect for the work the charity is doing.
Visit Razoo’s giving platform to learn about and make a free, secure donation to any registered nonprofit group in the United States.