image by: geralt
Tis the season of giving. But regardless of the time of year, the best donations to charity are the ones that are well informed.
Charities come in all shapes and sizes. If you can think of a good cause, there’s probably a charity for it, if not a hundred, ranging anywhere from long-established international household names to new, obscure charities run by a small group of people in your community.
One of the variables is fundraising efficiency, which refers to how much money a charity spends (on overhead costs such as salaries, postage, and website maintenance) for each dollar raised, with 100% being optimum efficiency.
How do you obtain this information? According to Sandy Ross, a CPA who specializes in non-profit matters, “It’s easy. Fundraising expenses and contribution income are clearly identified on every organization’s Form 990. Every charity’s Form 990 is available on the internet at www.Guidestar.org.”
That’s great when you want to examine a particular charity’s efficiency to see whether you want to make a donation. But say you want a broader snapshot of multiple charities. In that case, the information is no more difficult to find, at least when it comes to large charities. One source is Forbes magazine, which each year complies a listing of the 100 largest U.S. charities. The default order of the list is by size, but Forbes also provides each charity’s fundraising efficiency. A total of 13 charities, ranging from the Task Force for Global Health (#2 in terms of private support, the metric Forbes uses to determine the size of the organization HealthWell Foundation (#100 score perfect 100 percent. At the bottom of the list is the Red Cross, with a fundraising efficiency score of 73 percent.
If you’re looking for top-rated charities by category, Charity Watch is your jam. With 37 separate categories (African-American, AIDS through Cancer, Child Protection, Environment, Literacy, Women’s Rights, etc.), each charity is assigned a letter grade, with a simple click giving you a detailed overview of each charity, including information its financial documents and how much government funding it receives.
Looking for a one-stop shop for data on charities of all sizes? You probably can’t do any better than Charity Navigator, which contains general information on over 9,000 charities. Here you’ll find an overview of each charity and its various programs, along with assessments of financial health, accountability, and transparency, as well as providing links to current and past Forms 990.
Additionally, for each of use Charity Navigator provides visitors with a list of charities with perfect scores, plus a variety of Top Ten lists, including 10 Most Followed Charities, 10 Charities Overpaying Their For-Profit Fundraisers, 10 of the Best Charities Everyone’s Heard Of.
Another feature that can be especially useful is Charity Navigator’s list of Hot Topics, which is regularly updated to provide general information on causes receiving a lot of media coverage, coupled with a list of worthwhile charities addressing the pertinent needs. For example, as of this writing the most recent addition is Relief for the California Wildfires.
It’s important to investigate before you give not simply because even among good charities not all are created equally, but because many so-called charities are simply scams. As Kris Hundley and Kendall Taggart reported for CNN in 2013, an investigation by the Tampa Bay Times and the Center for Investigative Reporting found nearly 6,000 charities that paid for-profit companies to raise their donations, with the 50 worst charities paying their solicitors nearly $1 billion during the past 10 years alone, money that could have⎯but didn’t⎯go to the causes for which it was ostensibly donated. “The 50 worst charities in America devote less than 4% of donations raised to direct cash aid,” Hundley and Taggart noted. “Some charities gave even less. Over a decade, one diabetes charity raised nearly $14 million and gave about $10,000 to patients. Six spent no cash at all on their cause.”
Even on the smallest scale, scams are abundant. There may be no clearer example than a 2017 story about a woman who ran out of gas and received money from a homeless man. Gratified by his compassion, later she sought him out to repay him and give him clothing. They struck up a friendship, which inspired her to set up a GoFundMe account to help get him off the street. People from across the world were touched and ended up donating over $400,000.
You know what happened: it was all a lie. While the man really had been homeless, he was in cahoots with the woman and her boyfriend, and recently all three were indicted on various fraud-related charges after blowing the cash on luxury items, trips, and gambling and then turning on each other.
Charitable instincts are good ones, so follow them. But do so in an informed manner. After all, knowledge is power⎯and you want your donations to have as much power to do good as possible, don’t you?
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