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Smart Giving: 6 Tips to Help You Choose Your Cause Wisely

in Courtney's Posts, Give Back, Money Basics

Note: This is a post from Courtney Baker, chief seller and long-time running wo-man of MvD.

The bells are ringing and red buckets are ready to catch my spare change. But is my money really making a difference?

We all feel a bit eager to open our wallets and hand out money during the holidays. In fact, charities report that 40% to 50% of their yearly donations come during October, November and December. But I can’t help but wonder if my money is really making a difference.

What’s it being used for? How much of it is actually helping the cause?

I recently gave $25 to a local pregnancy center. They were able to buy three canisters of formula for a mom. I knew exactly where my money went.

But I’ve always felt skeptical of huge organizations like the American Red Cross. How does my $25 put a dent in anybody’s life when you are working on such a massive scale? And how much of that money is getting lost in overspending by the organization’s administration?

It doesn’t help either when I read headlines like American Red Cross Receives Two Multi-Million-Dollar Fines.

Then I remember that this organization supplies an insane amount of blood to the public – about 40%. And when their blood drives were seeing shortages over the summer, people were scared. Other massive organizations are working on projects that require all hands on deck.

Is it better to give to smaller organizations where I can see my $25 making a difference, or be a pea in the sea for bigger causes?

Both. Either. Your choice.

There’s not any one right decision when it comes to the size of an organization. However, there are a few details you should research before handing over your money. Keep these guidelines in mind and you’ll be more confident that your donated money has purpose!

1. Donate online or in person.

Don’t donate to anyone over the phone. You have the highest risk of getting scammed. If you can’t donate on an organization’s website, request some information be sent in the mail. Some local organizations may not have a site; if so, visit them in person.

2. Check the percentage of your donation that goes to the cause.

Let’s be real. Organizations have operation costs, and they need to advertise. They shouldn’t need more than 25% of donations going toward radio ads, however. 75% of incoming money should be used on the cause itself. Charity Navigator is a great resource that allows you to see the financials of each charity. Local charities may not have a profile, but it’s legitimately OK to call and ask.

One of our favorites, Charity:Water scored 81.4%, while mega-organization the American Heart Association only scored 53.3%.

3. Transparency is key.

Many organizations are shifting to be 100% transparent, telling you where ALL your money is going. You can find their complete financial profile on the Charity Navigator website. Many programs also track where your specific money went and how it’s being used.

When I ran some more organizations through Charity Navigator, Charity:Water scored 100% while Cancer Survivor’s Fund scored 47%.

4. Avoid clipboards and money jars.

Unless you have some personal relationship with the organization, I avoid these two common collection strategies. There’s no accountability for where the money is going or how it’s being spent. Want to support that specific organization? See #1.

5. Ask around.

Word of mouth is especially helpful for gauging the integrity of local organizations. I’ve flat-out asked friend who’ve volunteered in Africa which organizations were functional and which ones were jokes.

6. Get receipts for tax deductions.

There’s no shame in claiming your donations on your taxes. Keep track of them throughout the year and file a Schedule A with your return.

In the end, you pick your flavor.

Do you want to support an international organization or a local one?

Large or small? Helping animals or helping hunters? Helping those with cancer or those with depression?

Just make sure you pick an organization that’s doing what’s right for the people and spending these generous donations efficiently.

Any other tips to share? Comment and let us know!

{ 22 comments… read them below or add one }

Jacko December 13, 2012 at 8:54 AM

Good post great timing.

It’s like the old African proverb.

The best time to plant a tree is 20 years ago the second best time is right NOW.

I always recommend people to consider supporting Feed my starving children.

This is a great organization with an impeccable reputation that provides over 90% of net proceeds directly to children.

Thanks for sharing Merry Chirstmas

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Courtney December 13, 2012 at 11:43 AM

Love the proverb Jacko!

Is that charity domestic or international? 15% non charitable costs is a great ratio.

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Slackerjo December 13, 2012 at 9:14 AM

My family has everything. In triplicate. I don’t need anything. So all my shopping is to charity. I live in Canada which is a rich country so I give most of my money to help people in the developing world (especially women) be self sufficient. I can’t recall any Christmas gift I received 10 years ago but I do think about the breeding goat I bought all the time.

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Courtney December 13, 2012 at 11:47 AM

I read an article recently that took a group of high schoolers on a retreat. The first half was fun, adventurous activities like dancing and zip lines. The last half was service. When asked to list their favorite part, 89% of the group listed a moment that happened while serving.

I think charity is the most memorable!

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Paul December 13, 2012 at 9:46 AM

Most of my family’s charitable donations go towards our church and the missions it supports. In addition, my wife and I have each chosen one personal charity to support. My wife supports World Vision and I support the Evans Scholars Foundation. World Vision is a large organization that helps children worldwide, and the Evans Scholars Foundation sends golf caddies to college. It is the scholarship referred to (but not by name) in the movie “Caddyshack”. It pays full tuition and housing for four years. It paid most of my way through college, so it’s personal. Charity Navigator gave World Vision 3 stars and Evans Scholars 4 stars. Both spend around 15% in advertising and administrative costs.

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Courtney December 13, 2012 at 11:52 AM

I like that you’ve “claimed” a charity. It’s the best form of advertisement for the organizations.

You are going to have all our golfers (or Caddyshack lovers) heading to your favorite organization!

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Serena Star Leonard December 13, 2012 at 10:36 AM

We have been travelling through Latin America visiting charities and community projects for 8 months in our new passion project Five Point Five. We have been able to see first hand how crucial that $25 is for the tiny organisations like schools in the slums or soup kitchens, and how big an impact that money has in one of the biggest ones: World Vision which we just visited 2 days ago.

I am sure there are many scams out there, and plenty of organisations that mismanage the money. But that has never been enough to stop me from giving, and now after visiting over 15 projects in person and meeting these dedicated people who live to make a difference I will never be the same again.

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Courtney December 13, 2012 at 2:17 PM

Wow Serena! It’s great to have insight into the workings of the international charities. And what a project you are on! What are some of the other organizations you’ve visited? How do you approach an organization about visiting so you can see what’s happening firsthand?

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Serena Star Leonard December 13, 2012 at 9:15 PM

Hey Courtney,
We have visited a whole range including animal conservation projects, anti violence and women’s rights, education, skills training, hunger, helping isolated Mayan communities become self sustaining, orphanages and more.
There is a brief description here: http://www.retireyoung.com.au/inspirational-stories-blog-action-day/ and we have been to a lot more since then!

We approach the organisations through referrals or their website, World Vision has opened their doors to us, and more often than not we just meet people along the way who love what we are doing and will drive us to differing projects for impromptu visits.

We have been inside a brothel in Nicaragua, dug out smelly dead turtle eggs and invited to eat in remote villages where none of us speak the same language but there is enough communication to get the message across.

What we have found is a HUGE spirit for change and the want to make a difference. Projects that run on the smell of an oily rag that would benefit peoples lives immensely if they had more money. $25 can go a long way in places like this and it doesn’t seem to matter if it is a 1 person organisation or a global organisation we are yet to see anything that isn’t worthwhile.

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Jessie's Money December 13, 2012 at 11:57 AM

Great post! I just wrote one about giving also! It’s a wonderful time of year to think of others – but caution is key.

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Ed December 13, 2012 at 12:03 PM

Good tips…I also recommended working with the group you donate too…we have done that with a local bulldog rescue group and we have met the people and dogs our funds go to help…totally makes us even more ambitious to donate!

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Courtney December 13, 2012 at 2:18 PM

There are definitely some strong arguments for donating locally- like being able to be hands on with your organization. It’s especially great for people that have time to give instead of money.

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Marianney December 13, 2012 at 12:27 PM

How timely! Just this morning, the DJs on my favorite radio station were talking about how many big reputable organizations spend more than 90% of their donations on admin costs and exorbitant leader salaries. Turns out they were reading from a false email that’s been circulating for a while, which is a shame because they were now tarnishing the reps of good organizations while giving credibility to those that didn’t deserve it. Needless to say, I wrote them an email with the correction. Hopefully they air that tomorrow.

In any case, definitely check Charity Navigator, they have a very nice website that is easy to well..navigate! And read this too: http://www.snopes.com/politics/business/charities.asp

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Courtney December 13, 2012 at 2:30 PM

It’s amazing how damaging a wrong piece of information can be. As I read the Snopes article, I kept thinking ‘no way, really?’. If I hadn’t read the whole article, I would have been left with a lot of misconceptions!

That’s why I love that Charity Navigator exists!

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Leah December 13, 2012 at 12:52 PM

Good timing and good advice! Thanks Courtney! This time of year I like to give to the local food bank and the local charity that helps foster kids. Our family feels like we are helping those in need right here in our community, which feels good.

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Kurt Swann December 13, 2012 at 2:43 PM

Courtney!

Glad to hear someone write about this topic! It’s great that people donate money but who wants it to have it wasted? Sometime I do things locally. I mentor at a school for disadvantaged kids and they other day I bought some nets for the outdoor basketball courts so I knew exactly where my money went :) But I also sponsor kids through Children International and donate to Charity: water and use Charity Navigator.

One thought about Charity Navigator and overhead expenses etc. That type of evaluation doesn’t say much about how effective the charity is. One organization could have higher overhead with really effective results and another organization could have low overhead but be less effective in their mission. It’s good to know the charity isn’t a scam so I still look at Charity Navigator but I also make my own judgement about the organization too. I think it’s a good tool based on the info they have.

A few other evaluating organizations to consider might include the Better Business Bureau, Give Well, and Great Nonprofits.

Thanks for the post!

Kurt

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Jason Clayton | frugal habits December 13, 2012 at 5:40 PM

I really enjoyed this post – very timely with Christmas approaching. Because of these reasons, I usually try to pick charities in my own community (with Salvation Army being my favorite). There are others out there and using Charity Navigator will help immensely on choosing wisely.

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OC Budget Living Journey December 13, 2012 at 8:17 PM

I mainly donate to salvation army or good will since they will take anything such as textbooks and even mattresses! The last time we went, we donated our old computers, games, and clothing.

However, this year, we’re going to volunteer at the homeless shelter for the holidays as a family. We have done it once before and it was a rewarding experience although we can’t write it off at tax time.

Great article!

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Greer December 13, 2012 at 9:52 PM

Great tips, Courtney. Thanks for the link to the Charity Navigator website — most useful.

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psumba December 17, 2012 at 2:31 PM

I do most of my giving to organizations that either a family member or I have been personally involved with … and I always give at the LOCAL LEVEL rather than to the national office. That certainty starts with my church.

This year, I’ve given checks to several local Boy Scout troops. I know that the money will be used 100% for local programs with NO administrative overhead. Why the Boy Scouts??? I was a Boy Scout and my experiences there taught me leadership from the ground up. Because of decisions that they have made WRT LGBT issues, they are being cut off from support from groups like the United Way. While I am supportive of the LGBT community, I understand why the Boy Scouts have made the decision to exclude openly gay individuals and I support this decision. Hence my decision to provide direct support!

My daughter was active in the Salvation Army chapter in her college town. She got to see their work from the inside. She has told us about their efficiency in turning donations into community support. We try to write a check to that local chapter each year … even though my daughter has long-since departed, the officers in charge remain the same. We even donated a car to them last year.

My wife was once conned into giving to a scam over the phone. Needless to say, NEVER give to a telemarketer, no matter how legitimate it sounds. At best, the charity will get 10% of the proceeds … if they even get a cent (there are a lot of scams in charity donation solicitations)!

While my college constantly solicits money from me, I tend to give them more time than money … though they seem to always have a good use for what I do give. Their students benefit from getting access to a mentor who has perspectives that neither they, their teachers, or their parents can provide!

My biggest concern is that our ever-growing government’s increasing taxes & potential limits to deductions for charity will crowd out the share of my income that I have allocated to charitable donations. Where people received help from charities in the past, our growing entitlement programs are taking their place. As a believer in limited government, I feel that charities can do a better job in helping those who need help!

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BillGuard Blog December 24, 2012 at 4:50 PM

Another great option for charitable giving is to make an “in-kind” donation, which is a donation of a particular resource. Local animal shelters, for example, often say that they’re accepting donations of cat litter, pet food, scratching posts, litter boxes and new toys. Habitat for Humanity projects often accept donations of items useful in home-building. Those are just two examples, but the list of charities that accept in-kind contributions is infinite. The advantage to these contributions is that you know exactly what your contribution is being used for.

You can also donate time or skill. If you’re a CPA, for example, you can offer to file a charities’ tax paperwork.

Otherwise, if you want to donate money, then using a charity navigator is a good idea. The BBB lists charities, which is always a good place to start.

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gustav@ personal budget software January 1, 2013 at 5:40 PM

We give the bulk of our contributions to our local church and its various missions. You really need to be careful donating online due to the scams. That recent shooting of the school children in Connecticut produced one. Some character set up a website with photos of one of the kids and had his name all over the site and the alleged foundation named after him. He got caught early, I’m happy to say, and had to surrender the domain name and anything he received to the family. I think I could have found a better form of punishment, and one I can assure you, he would remember vividly for the rest of his worthless life.

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