How to Choose the Right Charity

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Choosing a Charity You Can Trust

It’s 2011 and across the globe millions of people have made New Year’s resolutions. Some have decided it’s time to get physically healthy, while others have vowed to spend more time with their families. If you’re one of the many who has decided to start supporting a charitable organization, you may be unsure how to decide which organization to choose. Here are some things to keep in mind:

The Type of Organization

Sometimes, the hardest part about choosing a charity simply has to do with the organization’s activities. There are lots of good causes out there and picking just one can be difficult. There are organizations that rescue animals, protect the environment, keep a watchful eye on our elected officials and confront human rights abuses – just to name a few.

When choosing a charitable organization, start by narrowing the possibilities down to an issue about which you truly care. You’ll still have plenty of organizations from which to choose. Once you have an issue or group of people in mind, you can use a website like CharityNavigator.org to find a list of organizations that fit that category.

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How the Money Is Spent

When you’ve narrowed your choices down to those in a particular category, start reviewing organizations’ spending habits. You want to be sure that your money is being used for programs that support the issue or people group you want to support, rather than being spent primarily on administrative costs. While every charity has administrative and fund-raising expenses, they should be kept within reasonable constraints.

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Watchdog organizations like the American Institute of Philanthropy recommend only supporting charities that spend 40 percent or less of their money on administrative and fund-raising costs. Once you’ve found a few organizations that appear to fit the criteria, see if you can get a copy of their financial information. A reputable organization will have that information readily available and some even post it online. While you don’t need to do a complete financial analysis (unless you really want to), you should look over a charity’s financial information and make sure money is being spent properly. Some organizations keep their “fund-raising” costs low by designating some fund-raising activities as “educational,” claiming that they are informing people about their programs rather than soliciting donations.

Again, a website like Charity Navigator can help, because it does a lot of the work for you. It reviews financial information for thousands of charities and generates reports based on that information. Each charity receives a star rating (one to four stars) based on its spending practices. In addition, the Better Business Bureau (BBB) has a division called the Wise Giving Alliance that evaluates charitable organizations. It uses 20 “accountability standards” to determine not just the fiscal responsibility of an organization, but also the effectiveness of its governance and oversight. Charities don’t receive grades like for-profit businesses that are evaluated by the BBB do, but a charity’s report will tell you whether it meets the BBB’s 20 accountability standards.

What Happens to Your Information

In addition to checking a charity’s financial health, you should consider reviewing its privacy policy, too. Some organizations share donor information with charities whose missions are similar. Information may be traded between organizations, or sold to telemarketers or mailing houses. An organization’s privacy policy should be clear. If it isn’t, ask questions. If the answers to your questions are unsatisfactory or make you uncomfortable, consider choosing a different charity.

Once you’ve chosen an organization and started giving money, it’s a good idea to check in again every six to 12 months, especially if there’s a significant change in leadership. Though an organization may be reputable when you first start giving, things can change over time. It’s rare, and not something you need to be overly concerned about, but it does happen. So, once or twice a year, check the organization’s financial status, and its ratings online.

It may take a little time to find the organization that fits well with your interests and meets your standards for financial responsibility, but it’s out there! Be patient, be thorough in your research and you’ll find the right one. Happy giving!

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