Technology has made it easier than ever to support charitable organizations. However, while this ease of donation can encourage many more people to give, it can also lead to people donating without first doing the proper due diligence. Before supporting an organization, especially with a large donation, individuals should invest some time in vetting that charity. While there are several charity watchdog organizations that grade charities, the issues they emphasize may not reflect what individual donors value. For this reason, people should spend some time personally researching an organization before donating to it. Some things to keep in mind when vetting a philanthropic organization include the following:
For the most part, organizations should be completely transparent with their financials. Taking a look at income and spending can give individuals a sense of what the organization values most. Most watchdog organizations value seeing lean operations, meaning that the vast majority of donations go directly toward the cause being supported. However, organizations may choose to invest money in their own development to provide even better services in the future. In general, younger organizations have larger overhead as they attempt to grow, while established organizations have lower overhead provided that they are not investing in research and development. If financial information is not readily available, this may indicate that it is time to look for a different charity.
Charities should be able to vocalize what progress they have made toward their goals. Being concerned with an issue and creating a program is only the start of fixing a problem. Organizations should also have some way of tracking the impact that they have made and show concern for changing strategies that are not working. If a charity can demonstrate the effect that it has had and the ways in which it has grown its programming through the support it received, then it is likely deserving of support. People should think of charities like other products that they buy. If a vehicle manufacturer claims to have the safest car but offers no data to back up that claim, then people shouldn’t buy it.
Each charity should have clearly defined short-term and long-term goals that guide the decisions it makes. Organizations that seem to be working in many different directions have little way to gauge their success. On the other hand, organizations with clear goals can show which ones they have achieved and which ones come next on the way to their ultimate aims. Charity employees should be extremely excited to talk about the goals of their organizations in terms of what is happening right now and what is happening next because this is their chance to share their passion.
The structure of a charitable organization can tell individuals a lot about how it operates. Different structures come with different requirements regarding the federal government and the IRS. The most common structure is a 501(c)(3), which means that the organization has proven to the government that it is actually a charity. Also, donations to organizations with this structure are deductible for tax purposes. Organizations that have a 501(c)(4) or 501(c)(6) structure are generally nonprofits with a more explicitly political focus. One structure that is becoming more popular in world of philanthropy is the LLC. This type of organization does not have the same tax benefits of the structures mentioned above, but it offers organizations more control over how they use money to meet their goals.
The people running a charity are ultimately in charge of the money donated, so individuals should do some research on who these individuals are. Not every charity will have the same type of governing body. While some have a board, others may have an executive committee. However, organizations should be transparent about how they are governed and who has power. Many organizations also have independent oversight. People in charge should have relevant experience and training and be able to vocalize clearly what has called them to their current position. Prospective donors may also be interested in learning how organizations hire, train, and evaluate their employees, as well as their volunteers. How an organization treats these people can reveal a lot about its values.
Many donors choose organizations based on their mission, but it is important to look at the initiatives a charity has created to work toward its goals. Sometimes, when people dig into an organization’s programs, they do not seem to make sense or address the issue the way they believe the problem should be solved. Organizations should explain their reasons for developing programming in the way that they have. Sometimes, this explanation can change a donor’s mind. If, at the end of the day, the approach still seems illogical, it may make the most sense to find a different organization . Also, organizations may develop different goals over time and create programs that do not exactly align with their original mission. For example, research organizations may end up doing advocacy work. For some donors, this does not matter. However, others may feel like their money will be more effective at an organization that focuses solely on research.