During the holiday season, one of the great American traditions is the generous support of charitable institutions. With the holidays just around the corner, the key question is, “How do I know which charities to support?”
With all the information out there, some of it misleading, it can be a challenge to make a wise decision. So before you reach into your pocketbook and give to a charity, here are seven tips to consider:
1. If it is a national charity, see if it has been approved by an accrediting body like the Better Business Bureau or the Evangelical Council for Financial Accountability. The standards upheld by these associations are generally best practices related to board governance, use of donations, reporting requirements and transparency. Although not an absolute guarantee that the charity performs effectively, approval does signal a level of accountability.
2. Ignore independent charity ratings that focus on financial ratios. For the most part these ratings do not provide an accurate picture of a charity’s worthiness. This may seem a bit harsh, but many people go to groups like Charity Navigator or Charity Watch to look at their rating of charities, only to be misled. For example, if fundraising expenses go over 10 percent of overall expenses, Charity Navigator will not give a charity its highest rating. There are way too many factors that affect how a charity spends its money to rank a charity accurately in such a way. For example, if a charity is young and growing, this cost by definition will be higher. So my advice is to ignore these ratings and instead do the following five things.
3. Look at the charity’s IRS Form 990. This is a public document that provides a host of helpful information in understanding the charity. You can go to guidestar.org to access this information for free and if you are interested in learning more in-depth financial information, you can purchase a more complete report from GuideStar.
4. Spend time on a charity’s website and look for clear indications of the charity’s mission being fulfilled. Do they have a clearly articulated mission? Do they provide details of their work, the programs your donations fund, and stories of lives or community interests that have been served? Trolling through a charity’s website should provide you a tremendous amount of information to help you feel comfortable in donating to that charityÃ¢Â?Â¦ or to make you pause and rethink that donation.
5. Check to see if the charity is endorsed by someone you trust. Although this is certainly not a deal killer, it’s helpful to know. The endorsers have obviously lent their good name to the organization and that does count for something.
6. Ask family, friends or acquaintances if they have supported the charity. If so, ask about their experience. What kind of communication do they receive from the charity, both through the mail and online? Do they get good information on the charity’s impact and a sense for how their donations are making a difference? Why do they continue to support the organization? If they have had a negative experience, you have a reason to consider another charity.
7. Check social media for who is talking about the charity and what they are saying. Check to see if the charity has a Facebook page. If so, you should be able to tell the kind of folks who are supporting the charity and what they are saying about it. You might also see if they are on Twitter or Instagram and take a look at what kind of content they are posting. Any of this information will give you some good insight on the charity.
Holiday giving is a great American tradition. I hope you will find at least one charity to support this season and give generously.
Rick Dunham is the President and CEO of Dunham+Company, which helps charitable organizations with their marketing and fundraising needs, and the author of “Secure: Discovering True Security in Turbulent Financial Times.”