America's charities, and more importantly, those they serve, need your support. And, as you can tell when you open your mailbox at this time of the year, they aren’t afraid to ask for it. Why do appeals increase at year-end? Because the year-end holidays are a time of religious and moral reflection that inspire many people to reach out to those who are less fortunate. Less altruistically, but still just as important, donors need to make their end-of-year giving decisions by December 31 to qualify for a tax deduction in this calendar year. Knowing that, charities increase their solicitations and an increase in charitable giving occurs between Thanksgiving and New Years.
But your support will do little to improve our world unless we all commit to pursuing responsible and informed philanthropy. We offer the following guidelines to ensure your holiday contributions are well-spent.
- Follow your philanthropic passions: Roughly one million charities exist in this country. Don’t settle for an organization that isn’t a match for your beliefs and goals. No matter what cause you want to support — whether it is finding a cure to Lou Gehrig's Disease, helping our returning troops find work or preventing the spread of Ebola in West Africa — there’s a charity out there that matches your intentions. Take the time to find it and confirm (not just assume) it offers the programs and services that match your charitable interests.
- Ensure the charity is efficient, ethical and effective: Before you give to any charity this holiday season, be sure to check that the charity meets these three criteria.
- Fiscal Health: Financially healthy organizations - those that are both financially efficient and sustainable - have greater flexibility and freedom to pursue their charitable mission.
- Accountable & Transparent: Charities that are accountable follow good governance practices and are therefore less likely to engage in unethical or irresponsible activities. And those that are transparent have nothing to hide and therefore readily share information publically. So, the risk that charities will misuse donations is lower than for charities that don't adopt such practices.
- Results: Knowing what the charity has accomplished is a critical step; after all, the charity's ability to bring about long lasting and meaningful change in the world is the key reason for their existence and for your donation.
Charity Navigator’s 0 to 4-star ratings include an evaluation of the charity’s financial health, accountability and transparency and the free site includes data on results reporting for more than 1,000 charities (with more added each month). If the charity you are interested in hasn’t yet been reviewed for results, then review its website and/or talk to staff about its impact. You want to go beyond heartwarming storytelling and get at the quality and depth of the charity’s work (for example, not just whether someone got a job but for how long). Look for charities that measure their performance and report on it to their donors. When they don’t meet the targets they have set for themselves, they should be showing that they adapt and learn from their efforts and are continuously trying to improve the services they provide.
- Recognize that 100% of your gift cannot go toward the charity’s programs: In an effort to build donor confidence in their work, some charities claim that 100% of your gift goes towards their mission because another donor has funded all their overhead costs. That proclamation didn’t change the fact that each of these charities still had to pay administrative and fundraising expenses (overhead). Donors need to abandon this expectation, since each charity must pay for basic infrastructure costs such as postage, utility and insurance expenses. Instead, focus on supporting efficient charities that have a reasonable level of overhead (ideally at least 75% of their budget to programs and services, 15% on administration and 10% on fundraising) while also bearing in mind that results should be the primary measure of effectiveness.
- Share your intentions and make a commitment: It is impossible for a charity to be successful without committed supports. So, once you have found a high-performing charity that matches your passion, make a commitment to it with the understanding that you are a partner in the charity's efforts to bring about real change. And don't hesitate to tell the charity of your giving plans so that the organization knows it can rely on you and it doesn't have to waste resources by sending you too many solicitations.
- Follow your investment: Once you’ve made a commitment, don’t completely ‘set it and forget it.’ Be sure to conduct an annual review of your giving portfolio. You’re not looking for a list of itemized expenses, but instead a progress report. If your charity can’t tell you what kind of results they created from your investment, find one that will.