My Community - January 2011
 

How to make the most of your charitable contributions
Look at more than efficiency to make a good gift better

How do you pick a charity to donate to? Do you go with organizations that you know? Perhaps you give to groups that have helped people you know or that you, yourself have benefitted from? Maybe you research their efficiency and choose ones that will spend most of their donors' money to provide services? Any gift to a legitimate charity is a good gift, but how can you make yours the best gift?

According to a report published last year by Hope Consulting, about one-third of Americans who gave to charities did not research the organizations that would get their money. And, those who did some research focused on how much of their donation would go to administrative costs. Most wanted simple facts and figures and only 15 percent wanted detailed reports. This means that donors typically are more interested in making sure their money isn't "wasted" on salaries and overhead, and they don't pay much attention to what their money actually buys or how the organization approaches those it helps.

Yet, despite their lack of effort to maximize the impact of their gifts, 85 percent of donors in the survey said they did care about the organization's performance, and three out of five said they would change their giving habits if organizations did a better job on areas that are important to them.

Making an informed decision about charities can be tough, mostly because there is no standard way to measure outcomes. One may count people served, another may count amount spent per person, and yet another may tout the number and size of the grants it receives. Other quality markers may include awards received and whether the organization is treating only the symptoms of a social need or dealing with the root cause.

GiveWell.org, an independent, nonprofit charity evaluator, says you should look at three main factors when evaluating a charity:

• Get a "bird's-eye view" of a charity's activities, including all of its programs and locations, along with how much funding goes to each.
• Look beyond the success stories for meaningful and systematic evidence of impact.
• Ask for information about the likely impact of additional donations, such as plans for expansion and projections of how much the charity can productively spend (or any expected revenue shortfalls).

On its website, GiveWell.org offers several sets of "do-it-yourself" charity evaluation questions, customized by cause, that can help you diligently research charities.

Finally, many people cite the fear of scams and fraudulent charities as factors for sticking with known charities or not giving at all. Your evaluation of a potential charity should include checking its legitimacy, and there are resources available to do just that:

• The IRS offers an online directory of approved charities, but you also should call the IRS (1-877-829-550) to verify an organization's tax-exempt status and eligibility to receive tax-deductible donations.
• The Better Business Bureau's Wise Giving Alliance provides information about legitimate charities and provides a way for you to complain about a charity if you feel you have been misled.
• Ohio's Attorney General's Office investigates complaints about potentially fraudulent charitable organizations. You can search consumer complaints online or call their toll-free help line (1-800-282-0515) for assistance.

Doing a little homework can help make your charity dollar make a bigger difference.