During this time of the year, many people feel inclined and find themselves in a position to donate money to charities. We as a nation are incredibly charitable, donating more per capita than any other society in the world. This is a wonderful title to have, but also comes with immense responsibility. It is more important than ever to understand where your money is going, and how it is being spent. We have outlined some items to look for before you donate your hard earned dollars.
First, make sure you are donating to a charitable organization with a tax-exempt status. Believe it or not, some are for-profit even though they hold themselves out as a charity.
Secondly, do some research on where they spend the donations. Some charities are significantly more efficient than others, for example, a well run charity typically has more than 80 cents per dollar go to their mission, with 20 cents or less going toward administrative or fundraising efforts. This should be taken with a grain of salt, as some smaller organizations have less economies of scale. You can find these metrics at websites such as www.charitynavigator.org .
Thirdly, never give to a charity via a telemarketer who calls or solicits you. These companies can take between 40-80% of your donation, leaving as little as 20% for the charity. If you wish to give, find a way to give to the charity directly, either through their website or a phone call instigated by you.
One last trick is to check with your company or the charity directly to see if any organizations are matching donations at the time you give. This can double or even triple the amount of money that goes to the charity.