Supporting a cause you’re passionate about is an admirable act. But if you want to have a positive impact with your generosity, it’s important to make sure your nonprofit donations go toward a worthy cause. Consider the following five elements before giving your hard earned resources to an organization for the first time.
1. Does the Charity Have 501(c)(3) Status?
You may not have considered how you can benefit personally from making nonprofit donations. But if you do want to list your financial contributions on your taxes, you first have to make sure you are giving to a tax deductible organization. Surprisingly, many well-known charitable organizations do not have this legal status.
How can you find out if your donations to an organization are tax deductible? Confirm that the organization you are giving to has been granted a 501(c)(3) designation by the Internal Revenue Service (IRS). To find out for certain if the charity you wish to support has this classification, look them up on GuideStar.org.
If you choose, you can still opt to donate to organizations you are passionate about that do not have 501(c)(3) status. But remember that you will not be able to deduct the nonprofit donations from your taxes.
2. What Is Their Spending Ratio?
When you donate to an organization, you don’t want your hard-earned money to go toward paying for the CEO to go on a cruise. You want to support a cause you are passionate about. To discover if a charity is spending your money appropriately, ask about their spending ratio.
Well-rated nonprofits generally spend at least 75% of their resources on services, programs, or other applicable items, with only the remaining 25% going toward fundraising or administrative costs. If an organization spends the majority of their funds on salaries, you may want to reconsider and find another charity to support.
While 75% is ideal, charities may be forced to spend more toward startup costs if they are just getting off the ground. Their location could also impact how much they need to spend on utilities, building rent, and other necessities. That’s why the spending radio is important to consider, but does not have to be a hard line in the sand that prevents you from making a donation.
3. How Transparent Are Their Operations?
A well-run charity should be transparent with their operations and funding, and will have built in accountability checks in place. Rather than simply having a CEO, they will also have a governing board. This board should include at least five people who aren’t directly involved in the charity. This will bring accountability to the people who work for the company, as they will have to report back to the board.
To find out if the organization you are thinking of supporting has this transparency and accountability in place, check out CharityNavigator.org, where you can also find out about their spending ratio and view their annual reports.
4. Are They Making a Real Impact with Their Nonprofit Donations?
Another mark of a healthy nonprofit is results. A responsible midsize to large organization will often use a third-party or will self-assess to evaluate their effectiveness and efficiency. You can call them and ask them for a copy of the most recent report to find out the results.
Even if you would rather not read through official reports, you can do some digging on your own to find out how much good is done by an organization. Read through their website and social media accounts to see if they post stories about the work they are doing. When you see for yourself that a charity is actively doing great work that benefits their community, you can feel more secure in funding their efforts.
5. How User-Friendly Is the Giving Process?
Even if you have selected the most worthy cause to support, you likely won’t go through with the donation if they make it too difficult to do so. Do you have to sign your life away on a long, drawn-out form before you can send funds? Do you have to physically attend a fundraiser and put cash or a check into a donation bin?
These issues can make giving nearly, if not entirely, impossible. In today’s technologically advanced society, you naturally will prefer more convenient methods. One of the first modernized giving options was text to give.
But despite claims that this method is fast and convenient, there are serious problems with text to give. First of all, donors are often limited in their gift amount, only able to make nonprofit donations of $5 or $10. Secondly, the organization has to work with mobile carriers, and there is often red tape involved.
Add to that the difficulty of memorizing text to give codes, and this giving method becomes quite unfriendly to donors like you. Why should you have to use troublesome text to give when you could use a convenient app like Givelify instead? Before making a donation, look into an organization’s giving options. If they make the process too complicated, you can opt to find another quality nonprofit that keeps your needs in mind, making the process fast and easy.