Good Citizen

Ask: “Is it a cause I care about?” – when you are approached by an organization, friend, relative, coworker, etc., the very first thing to ask yourself is if it’s a cause you want to spend your hard-earned money on. Remember, it’s your money and you are free to decline solicitations. You should never feel pressured to give money.

Ask: “How much can I afford to give?” – answer this question honestly, based on a review of your finances. Giving generously is a wonderful thing and very rewarding, however, it must be within your means. If you don’t have the means, don’t give money – consider giving your time to the organization instead. If you put a charitable donation on a credit card, make sure you can pay it off immediately. You should not go into debt or pay interest because you are moved to give.

Confirm 501(c)(3) Status – ensure the group you are considering donating to is tax exempt under section 501(c)(3) of the IRS code. This means that they are legally allowed to solicit money from the public. You can do this by 1) asking the organization for a copy of their official IRS documentation, 2) looking on this IRS website or 3) looking on Charity Navigator or GuideStar.

Review how the organization uses its money – how to evaluate an organization’s fiscal responsibility is currently undergoing some debate and there isn’t any one formula that works in all situations.

That said, two generally agreed upon guidelines are 1) an organization should not spend more than 35% of its budget on fundraising efforts, and 2) an organization should spend at least 65% of its budget on program services.  There are, however, exceptions regarding both percentages and arguments can be made in favor of spending more/less in each area.  

In order to do an effective review of an organization’s fiscal spending, you will need at least one of the following: 1) IRS form 990 or 990EZ, 2) an annual report, and/or 3) an audited financial statement. You can request these documents directly from the organization – if they will not provide these documents, you may want to reconsider supporting them. You can also find copies of many 990 and 990EZ forms on GuideStar.

The Better Business Bureau has developed “Wise Giving Alliance Standards for Charity Accountability,” which are designed to assist donors in making sound decisions. You can access them here.

Determine if the organization is delivering on its mission – every non-profit organization has a mission and should be held accountable to fulfilling it. You can learn about the impact of an organization in many ways, including a review of its website, speaking with the executive director, board members and/or participants in its programs, reviewing its annual report or speaking with others in the community.

Ensure the organization’s policies are inline with your beliefs – like for-profit corporations, every non-profit has a set of guidelines and policies that dictate how it functions. It’s important to review these guidelines and policies prior to supporting the organization, as you would not want to fund a group that has policies not consistent with your beliefs. For example, do they discriminate in terms of whom they serve or who can participate? Do they provide services you don’t agree with? Do they have employment policies that are fair to the staff?

Find out how much of your donation is tax deductible – one of the benefits of donating money to a non-profit is that your contribution is tax deductible to certain limits. You can learn more about this by visiting the IRS or speaking with an accountant or tax attorney.