Before donating to charity, be sure to do your research.
Ask a few questions to protect yourself from fraudulent schemes and increase the probability that your contribution will go directly to the cause you support. It would be disappointing to learn your charity spends much of its donations on overhead instead of good works. We don’t want to waste money with many people in need and meaningful causes to support.
Here are five questions to ask before giving to a charity:
Does Your Charity’s Mission Align With Your Values?
You have many choices when it comes to giving to charity; learn about the charity’s mission. Is it vague or crystal clear? A good place to start is the charity’s website at the About Us or Mission tab. Pay careful attention to the wording of the mission statement.
Another resource is tapping into Guidestar’s extensive charitable organization database. Guidestar provides resources for donors to make informed decisions. This way, you can determine if the charity is a good fit for you to support.
For example, Guidestar shares the mission of the American Cancer Society as their “critical day-to-day mission work; we are working to reduce cancer deaths by 50% over the next 25 years.” On Guidestar, you can learn about the charity’s mission, key strategies, capabilities, and accomplishments.
Is This Charity A Tax-exempt Charitable Organization?
Determine if the organization is a tax-exempt charity registered as a 501(c)3 non-profit corporation with the IRS. According to the IRS, “the exempt purposes set forth in section 501(c)(3) are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals.” The categories of organizations with tax-exempt statuses are broad, so there should be many choices.
Fortunately, the IRS has a searchable database to verify your charity’s tax-exempt status. You can search by the exact charity name or the EIN tax identification number, and the database provides the most recently filed IRS Form 990. There are exceptions as certain charitable organizations such as churches and church schools may be exempt from filing the IRS From 990 and still maintain their tax-exempt status.
Is Your Donation Going To Causes Or Administration?
While every organization has overhead, ideally, you want to give to an efficient organization with minimal overhead. One way to learn about your charity’s financials is Charity Navigator. This site organizes its research in four areas: key accountability measurements, tax forms and disclosures, website disclosures, and financial metrics.
Charity Navigator provides a star rating with current and historical information. For example, the Stephen Siller Tunnel to Towers Foundation currently has a four-star rating from Charity Navigator. Under financial metrics, you can see that their program expenses ratio is 94.05%. Charity Navigator organizes information to make it easy for a donor learn about a charity’s financial information.
How Significant Is This Charity?
If a charity is tiny, the organization may need to focus more on fundraising than service, and your contribution may not be effective in moving your cause forward. Understanding the significance of a charity, its size, and its impact will make you a more informed and knowledgeable donor, ensuring your contribution is effective and meaningful.
Charitable organizations must file an IRS 990 form, which discloses financial information. You can find financials and an analysis of your charity’s form 990 on Guidestar.
How Does This Charity Interact With Donors?
While helping others in your community is the primary benefit of giving to charity, camaraderie is a secondary benefit. Find out about local volunteer opportunities. What types of local charitable events and fundraisers does this organization have? While giving may warm your heart, interacting with other civic-minded people may enhance your life with community involvement and foster new friendships.
Americans are generous people. According to the 2024 GivingUSA Report, 67% of charitable gifts came from individuals, while corporations provided 7%. Many of these donations serve local communities. When we donate to a not-for-profit organization, we want some bang for our buck. Ask a few questions to feel even better about donating to charity.
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