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 essential 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 nonprofit donations. But if you want to list your financial contributions on your taxes, you must first make sure you give 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 if the charity you wish to support has this classification, you can look them up on GuideStar.org.
If you choose, you can still 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 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 spends its money appropriately, ask about its spending ratio.
Well-rated nonprofits generally spend at least 75% of their resources on services, programs, or other applicable items, with only 25% going toward fundraising or administrative costs. If an organization spends most of its funds on salaries, you should reconsider and find another charity to support.
While 75% is ideal, charities may be forced to spend more on startup costs if they jet off the ground. Their location could also impact how much they must spend on utilities, building rent, and other necessities.
That’s why the spending radio is essential to consider, but it does not have to be a hard line in the sand that prevents you from donating.
3. How Transparent Are Their Operations?
A well-run charity should be transparent with its 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 considering 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 instead not read through official reports, you can do some digging 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 their work.
When you see for yourself that a charity is actively doing great work that benefits its community, you can feel more secure in funding its efforts.
5. How User-Friendly Is the Giving Process?
Even if you have selected the most worthy cause to support, you likely will only go through with the donation if they make it easy enough 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 severe problems with text to give. First, 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 donating, look into an organization’s giving options.
If they make the process too complicated, you can find another quality nonprofit that keeps your needs in mind, making the process fast and easy.
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