This time of year, you might be thinking about donating some of your money or your time to charity. You’re certainly not alone. According to Charity Navigator, total charitable giving in 2012 was about $316.23 billion in the United States, with about $223 billion of that from individuals.
Many people do their giving over the holiday season, partially because of warm, holiday-induced feelings and partially to nab a tax deduction.
If you’re looking to give this holiday season, whether you have $10 or $10,000, do some research to make sure you’re getting the most bang for your charitable buck. Strange concept, right? We often think of value for our dollar when we’re buying something for ourselves. After all, we want to spend our money well.
But when it comes to charities, we tend to choose whatever organization has the most heart-wrenching marketing campaign. The problem with that is that we often end up giving to charities that spend most of it on operating costs or have inefficient or ineffective programs.
Luckily, finding efficient, effective charities is simple. Here are three ways you can be sure that individuals in need are getting the most out of your charitable donations:
1. Read this article
This article from a 2012 issue of Christianity Today is a must-see for anyone concerned with charitable giving, whether you identify with Christianity or not. The author discusses the difficulty of measuring the real value of a nonprofit institution’s programs.
The article goes on to assess 10 popular types of nonprofit programs. These programs were assessed by 16 economists from some of the top universities in the United States (and one from the World Bank).
The economists were asked to rank each of the 10 programs based on impact and cost effectiveness per donated dollar. Interestingly enough, despite the difficulties of accurately assessing a charity’s effectiveness, the economists agreed on which interventions are best and which are worst, as far as cost effectiveness goes.
Regardless of your faith, the article is an interesting read. If you don’t have time to read it, here are the rankings and scores for the 10 interventions discussed in the article:
- Clean water initiatives (8.3/10)
- De-worming treatments for children (7.8)
- Provide mosquito nets (7.3)
- Sponsor a child (6.9)
- Buy wood-burning stoves (6.0)
- Participate in microfinance lending (4.2)
- Fund surgeries, for cleft palate, cataracts, etc. (3.9)
- Donate a farm animal (3.8)
- Buy fair-trade coffee (1.9)
- Buy a child a laptop (1.8)
As you can see, some of the most-marketed types of organizations – fair-trade coffee companies, initiatives to get laptops to kids, and organizations that let you buy farm animals – are some of the least cost-effective charities.
This doesn’t mean that these lower-ranking charities don’t do any good. It means that your money will do much less good than if you put it into a higher-ranking charity.
2. Conduct online research
The above information tells you what types of charities tend to offer the most cost-effective, high-impact interventions. But it doesn’t tell you which specific charity you should give to.
If you have a choice between a well-digging charity that uses 20 percent of its donations to dig wells and a wood-burning stove charity that puts 80 percent of its money into buying stoves, you should probably opt for the latter.
Luckily, finding out which charities manage their money well and make a big impact is easy, just consult these online resources:
- Guidestar - This website lets you research hundreds of thousands of charities to examine their financial records, their mission and their overall legitimacy.
- Charity Navigator – Similar to Guidestar, this site lets you research charities by name or keywords and gives charities scores based on a variety of factors.
- GiveWell – GiveWell researches charities itself and publishes annual results to help you decide how to give.
- CharityCheck101 – This simpler site lets you ensure that an organization is a tax-exempt nonprofit before you give. You can also use this site to find the organization’s EIN, which can help you find out more information about the charity if it’s not easily found on one of the other sites above.
Sites like Guidestar and Charity Navigator evaluate charitable organizations based on their IRS form 990s. These are the forms that charities use to report their income and expenses. These forms list program expenses, executive pay, and growth in income and programs.
Because there are so many charities around the world, the nonprofits that run such websites as these cannot evaluate every single one. So if you’re curious about a smaller local charity that you can’t find with a name-based search, check out the unrated organizations on Charity Navigator.
Using the organization’s EIN, which you can find on Charity Check, you should be able to access the organization’s tax forms and examine them yourself.
Also, you can contact the organization directly. It’s always a good sign when an organization will be up front about its spending, salaries and income, though you need to take nonofficial paperwork and figures with a grain of salt.
3. Set up a fundraising campaign
Once you’ve chosen a wonderful, effective, responsible charity or two that you’d like to donate to this holiday season, why not take things a step further? Instead of writing a check, set up a fundraising campaign to get friends and family members involved, too.
You could host a bake sale or a holiday party to raise funds. Or, you could take an easier route and set up an online fundraising page. Then, tell friends and family members about the charity you’re donating to and why you’ve chosen it.
Let them give if they’re interested and see how much money you can raise together.
The following sites will let you set up a fundraising page quickly and easily:
- Causes - This Facebook platform lets you use the social media outlet to raise money for any cause that matters to you.
- Crowdrise - Set up a page to track all your charitable giving and volunteering, and then create a fundraiser to get others involved.
- Individual charities – If you’re interested in a relatively large charity, check to see if it has a way to start a similar online campaign on its website. Some that do include charity:water and The Water Project.
These three steps will take time, sure. But imagine the impact your giving will have when you ensure you’re giving to the right projects by the right charities with the help of friends and families to multiply your gift!