7 Tips for Making Effective Charitable Donations
In the wake of the recent events in Japan, you might be looking for ways to assist the recovery and reconstruction efforts. When tragedy occurs far from home, the easiest and most obvious way for most of us here to help is to provide monetary aid to non-profit organizations for disaster relief. After events like 9/11 and the Haiti earthquake, however, you might be rightfully gun-shy about making charitable donations without knowing exactly where your money will be going.
While this post is in part a reaction to current events, all non-profit organizations have ongoing funding needs, and many depend largely on private contributions to meet those needs. So, the intent of this post is not only to help you decide how and where to send funding for disaster relief, but to also provide you with an overall framework for effective non-profit giving.
In this post I’ll first suggest some ways to help you select a worthwhile organization, and then provide some additional tips for making sure your donation is doing exactly what you want it to do.
Finding the Right Charity
Unfortunately, a few bad apples have caused the non-profit sector take a beating, particularly the Red Cross’ handling of donations after 9/11, and numerous organizations to which people donated in response to the 2010 earthquake in Haiti. As a donor, there are a couple of key steps you can take to ensure that your donation goes to the best possible organization:
- Do your homework! Before donating – particularly to a large national or international organization – you should first research the organization on CharityNavigator.org. This site gives organizations a rating based on several factors, including their administrative expenses and operational efficiency. That rating is basically a numerical answer to the question, “How well does this particular organization do what says it does?” The site also provides a clear explanation of how the ratings are computed, as well as numerous top-ten lists of high-performing organizations.
- Dig even deeper. In order to find out whether an organization is a good steward of its funding, check out its IRS Form 990 – the non-profit equivalent of a tax return – which provides in-depth information about top employee salaries, fundraising expenses, and other financial information.
Making Your Donation Work for You
For some people, an important factor in making a donation is knowing that their money will directly assist the cause to which they are donating, rather than paying for the organization’s staff salaries and power bills. Keep in mind, however, that without these administrative expenses – staff to run the organization’s programs, and a building from which to administer them - non-profits would be unable to achieve their mission.
However, if you want to make sure that your donation goes to precisely to your intended purpose, be it food aid, medical supplies or emergency shelter, there are a few ways you can make that happen:
- Earmark your donation. Absent a specific designation, a non-profit organization can use general donations in any way it pleases (so long as it goes to serve their stated mission). This is how many non-specific donations in the wake of a major disaster are diverted to other uses, like administrative costs. If you feel the need to do so, specify that the contribution is for “food aid,” “medical supplies,” or whatever use you choose. Keep in mind, however, that more general donations to “Japan earthquake relief” may provide some much-needed flexibility for the organization. Trust the organization to put the money towards the most immediate and pressing needs within that broad designation (after all, a donation for “medical supplies” is unlikely to do much good if there are few survivors needing medical attention). This enables you to determine where your money goes, while simultaneously allowing the organization to put your contribution to its best possible use.
- Research your organizations. Rather than simply giving to a well-known organization, take time to do a little bit of homework. In addition to checking out their overall operational effeciency, make sure that the organization you’re giving to has an established track record in both the country and the specific type of relief to which you want to contribute. Giving to a large and/or well-known organization may not be the best use of your money if that group does not already have the resources and presence in the affected community. Consider the specific type of assistance that you want to contribute, and take the time to find an organization that does that kind of work, in the affected locale.
- Give in the most direct way possible. Text message donations are easy, convenient and of little consequence to your wallet (until you get your cell phone bill, that is). However, those donations are diluted significantly by administrative fees and by the fact that it can take up to three months for the money to get to the intended recipient organization. Where possible, send a check or make a contribution through the organization’s website.
- Get your employer to match. Many companies have matching gift programs, so it’s worthwhile to investigate whether your employer will match the charitable contributions that you make. These programs vary widely, and some companies will only match contributions to pre-approved organizations, so check with your human resources department before you open your checkbook. Where they are available, matching gift programs can double your contribution, making your donation more powerful at no cost to you!
- Offer additional help in the following months. Donations spike sharply after a major disaster, but quickly fall off. However, the recovery efforts often last for months, or even years. After your initial donation, follow up with the organization(s) to see whether additional help is needed to fund ongoing efforts. This is where your contribution can really make a major difference.
After a major catastrophe like the recent Japanese earthquake, our immediate reaction is often to donate to one of the myriad relief efforts. However, it’s sometimes difficult to know which organizations and which efforts will use our contributions the most wisely and efficiently. Hopefully these suggestions will provide some clarity and guidance that will ensure your charitable donation has the greatest possible impact.
I’d love to hear from you: What ways have you found to give your charitable donations the most bang for your buck?