Asking yourself a few questions before giving can help you decide which charities will do the most with your money. Here’s a checklist of things to think about when deciding to which charities you’d like to contribute.
Is the cause something about which you’re passionate?
Donating to a cause you believe in can be a great feeling. We all have personal reasons for supporting the causes we do so take the time to really evaluate which charities you want to support and why.
Does the charity maintain its finances well? Is it fiscally responsible?
At the end of the day, you want to make sure that the charities that you support with your hard-earned cash actually use it to the best of their abilities. Most of us would prefer to fund a charity that puts most of the money they raise toward their mission. You should be able to follow the money and find out exactly how much is spent on research or outreach or any other services provided, how much is spent on overhead, and how much the CEO and other executives make. Charity Navigator research puts the average executive salary in the low to mid six-figure range for charities they rate.
Is the charity transparent?
Charities are required to file IRS Form 990, which shows the charity’s income, mission, spending, governance practices, and salaries of executives. It’s an easy way to see how much money goes to toward the mission and how much goes to administration and fundraising. The charity should have its Form 990 posted on its website, along with names of board members and key staff, their privacy policy, as well as its audited financials.
Is the charity effective?
Is there hard evidence that the charity has a good track record of effectiveness? It shouldn’t be too hard to find out the impact of an effective charity. There are several sites that rate charities according to established criteria. BBB Wise Giving Alliance, Charity Navigator, and GuideStar are a few. Charity Navigator also has a helpful list of questions that you can ask of a charity before you donate. It is recommended to ask about the organization’s goals, mission, progress, and outside sources for review of the charity.
And finally, if it just isn’t the right time for you to give money to a charity, maybe you can give your time. I currently serve as a board member of Big Brother Big Sisters of the Ozarks and Developmental Center of the Ozarks. I also teach financial literacy classes at The Missouri Job Center, Harmony House, and Habitat for Humanity.
Whether you choose to give your time or money, supporting a charity is a great idea and could even be a tax write-off. Check with your CPA or financial advisor to be sure.
At Baron Financial Group, I am more than happy to help people of every age and stage get the education you need to put you on the right path to pursue your individual financial goals.
For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera Advisor Networks LLC nor any of its representatives may give legal or tax advice.