With approximately 170,000 nonprofit organizations in Canada and 1.54 million in the US, deciding where to gift your charitable dollars can be overwhelming.
Whether you are new to charitable giving or are looking to expand the organizations you support, there are some critical considerations before choosing a charity to donate to.
Do Some ‘Creeping’
First and foremost, it is important to vet your charities before donating. Reading reviews from people who have contributed to that charity in the past, volunteers who have worked at the charity, or past staff can help you determine whether or not it is a reputable organization.
Social media sites are great for vetting nonprofits in this way, as they can give you a good idea of the problems and concerns and the achievements and success of the organization. I also scour Google for articles and reviews. But, be critical and don't believe everything you read because … it is the internet.
I always look at a nonprofit’s finances. You want to make sure they are transparent about their overhead costs and mission, with regular informational updates. You can generally find the basic financial overview in their annual report, which is typically found on a charities’ website. You can also request this information. I am always wary of a charity that isn't transparent about its financials.
Typically, a charity is good if they spend 75% of its revenue on aid programs and the rest on other costs like administration and fundraising events. Websites like charityintelligence.ca will connect you with a lot of the nonprofit information you will need to make an informed decision, like tax filings and governance documents.
A word of caution... Financials aren't always the best way to determine a good charity from a bad one. Charity scams can look good on paper. Knowing how your donation is being spent and how much is going to those in need can help you avoid schemes. You want a charity that is committed to transparency and accountability.
It is good to be wary of some charities and donation requests. Often, less credible charities try to profit off your compassion for victims and lack of time to vet organizations properly during disasters. As a good rule of thumb is to not respond to direct solicitation unless you are sure you are dealing with a reputable organization. Scams will typically use email, phone, or door-to-door techniques and will often use names similar to other reputable organizations, so exact wording is vital here.
If you are concerned about a donation request, ask for references like a website or pamphlet to check the organization's credibility before donating.
Contacting experts may also be helpful in this area. If you are interested in community outreach, contact a leader in the community. If you want to help in international development, talk to someone who knows about international development. They might help you distinguish what is needed to reach a particular goal and direct you to specific charities that are good and qualified to do what they do.
Aligning Your Values
Researching charities before you donate will also allow you to see if an organization is well equipped and qualified to pursue its mission. Often, throwing money at the problem does not solve it, so check how they are planning to achieve their goal and how your donation will be used to help them reach it.
Choosing a charity is also a very personal decision. Chose a cause that you are interested in and passionate about. This will strengthen your connection to the organization, and you will be more invested in the mission they are trying to achieve. Creating a positive impact will be more meaningful to you if you are genuinely interested in the cause. Think about their mission; is it clear, do you believe in it, and do you want to help them achieve it?
Look at a charity's values and see if they align with your own. Similarly, does the leadership of the organization match those values? Or in other words, are their values surface deep, or are they ingrained through the organization?
Local, National, or International
The next thing to think about is where you want your donation to go, locally, nationally, or internationally. Many people choose to donate locally because they feel their money will significantly impact a smaller charity. However, even small donations can have a larger impact on international causes.
Often, one dollar goes a lot further toward helping those in need internationally than it does here. But, if you choose to donate to a local charity, you are more likely to see the impact firsthand in your community.
Tip: You can designate your donation. When I donate, I generally donate to what we can 'general funds,' as I understand that it takes money to run the administration of a charity. But, it is possible to donate to a specific program or aspect of the charity.
How You Want to Donate
When donating money, think about how much you want to give and how many charities you want to give to. I recommend choosing fewer charities because donations cost time and money to process, and your donation will be more effective. Think about donating $200 to just three charities rather than the same amount to 30 charities.
Also, consider setting aside a specific amount to support something new or unique. Consider using 10% of the total donation amount towards a small or unknown charity with a new approach. This will allow you to branch out to new charitable causes that you may not have had the opportunity to give to in the past.