Five Questions to Ask Yourself Before Giving to a Charity

Five Questions to Ask Yourself Before Giving to a Charity

Your wallet, your heart and your head must all be open when donating to a charity. The first two are easy: you either have the passion and the funds or you don’t. However, the latter requires you to ask yourself five important questions to give wisely to a reputable charity.

 

What truly interests you? A charitable heart can be pulled in many directions but it takes mindfulness to identify the organizations that are most meaningful to you. Take time reading the mission statements and understanding a charity’s goals so that they mirror your unique values, not just a cause that is universally good.

 

Do you want to give to a general fund or a specific program? Like any investment, you want to make sure that your dollars go a long way. Instead of a Return on Investment, concentrate on your ROG, or Return on Giving. Determine “multipliers” for your donation and figure that in the rate of return. For example, a $100 donation to an organization could make your community $200 richer, or a $100 donation could enable volunteerism. A day’s work by a volunteer that would replace professional services charging, say, $50 for eight hours, is a $300 net on your $100 donation. Set goals for the outcomes of your donation and identify charities that give the best ROG.

 

Will your donation be tax deductible? You may also want to take advantage of tax breaks. Part of your research of charities should involve a visit to the IRS website to search its database of organizations eligible to receive tax-deductible charitable contributions. Keep in mind, this database does not include churches and governmental bodies.

 

How well is the charity rated by national charity evaluators? Your homework on a charity should also include a close look at third-party evaluations. Charity Navigator and GuideStar are excellent resources to use to examine charities’ effectiveness, governance and finances, such as program and fundraising expenses and executive compensation. Charities are required to make their tax returns, or Form 990s, available to the public each year, and third-party evaluators like GuideStar compile 990s of more than 1.5 million nonprofits.

 

National evaluators typically have grades or ratings that are based on financial ratios on programs (minimum benchmarks between 65 and 75 percent) and fundraising expenses (35 percent). Look for sources that take into account several standards. For example, the Better Business Bureau’s Wise Giving Alliance (give.org) has criteria that includes board oversight, appeal accuracy, annual report availability, marketing disclosures and responsiveness to donor complaints.

 

Will your employer match your gift? According to the America’s Charities 2015 Snapshot, 65 percent of large companies match gifts, while only 28 percent of small to mid-size companies match. Corporate matches through employee payroll contributions has increased significantly in the last decade (58 percent from 2006 to 2013 in America’s Charities survey). This presents a tremendous opportunity to augment your donations as millions of dollars in potential corporate matches go unused each year. Contact your HR department to see how you can take advantage of employer matches.

 

By seeking the answers to these five questions, you will find the peace of mind needed to stretch your heart and your dollars to where they are needed most.

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