6 Best Practices for Charitable Giving
1. Consider Giving Locally
Sometimes giving to overseas causes is urgent and necessary, especially after natural disasters. However, for ongoing social and economic issues, sometimes your money will stretch farther locally. Large international organizations sometimes have massive overhead or mismanagement that reduces your donation’s impact.
Giving locally is even more important when there are major issues affecting your community. For example, Chicago has experienced a gun violence epidemic in recent years, and nonprofits like Cure Violence are at the forefront of deescalating conflicts. Local organizations are particularly vulnerable to loss of grant money due to volatile government funding, so private donations are a critical lifeline for them.
2. Research Policies and Restrictions
Some organizations will avoid giving grants or services to people who aren’t completely in line with their religious or moral beliefs. While the Salvation Army has reportedly implemented new nondiscrimination policies, the charity used to attract major criticism for its handling of LGBT issues. (It’s worth noting that nondiscrimination clauses aren’t always enforced, so only time will tell if the Salvation Army has really reformed itself.)
In another major controversy, the Susan B. Komen Foundation temporarily stopped funding breast cancer exams provided by Planned Parenthood. The decision was quickly reversed after public outcry, but the event showed that internal politics of an organization can affect how its programs are implemented.
3. Don't Expect Perfection
When researching charities, it’s common to be put off by filings showing high fundraising and administrative expenditures. Who wouldn’t want 100% of their donation to go to someone in need?
However, the reality is that all except the most exceptional charities see at least 15-20% of their expenditures go to administrative expenses. Getting a charity to run entirely on volunteers is almost impossible! The Better Business Bureau Wise Giving Alliance looks for charities that spend at least 65% of their expenditures on program expenses, as it’s not always realistic to avoid fundraising expenses on top of administrative costs.
Additionally, newer and smaller charities may not be able to avoid large overhead percentages. If you’re interested in a charity but are put off by a percentage, do a little digging to see if it’s justified. If it’s a small local charity, consider emailing and asking about the organization’s history and current projects. Quality over quantity is important – maybe their main program is extremely effective and worth the high overhead!
4. Cut Out the Middleman
Does the nonprofit you’re looking at give direct aid, or does it mainly funnel grants to other organizations? Giving to major grant-givers like the United Way may seem easy, but it can mean less oversight as to where your donation is going. It also means that your donation goes through two layers of administrators that take out a chunk of the money along the way. Sometimes this extra layer means more oversight, but that oversight may be redundant if the smaller recipient organization has sufficient management and oversight practices of its own.
This is another reason why it may be worth it to give directly to a smaller charity that has larger-than-ideal overhead: you’re still avoiding having your donation drained by another group’s bloated administration. If you trust a particular local organization to make an impact, don’t hesitate to send your money directly to them instead of to whatever major charity comes knocking in their place.
5. See If Your Employer Matches Donations
It’s typical for large employers to match or even double an employee’s contributions to charities. At some employers, only certain educational or cultural organizations may qualify, so contact your HR department to be sure.
If your preferred charity doesn’t qualify for your employer’s matching program, you can consider locating a similar nonprofit that does qualify. It’s common for religious organizations to be ineligible, but sometimes a charity affiliated with a religious group will still qualify. Of course, if your heart is leading you to give to a specific charity, you should still give to them anyway!
6. Look For a Trusted Affiliate
You may be a fan of a local church or social justice group that does good work in your communities, but donations to such groups aren't always tax-deductible. (In America, church donations are typically tax-deductible, while in Australia they usually aren't.) The good news is that these organizations may work with allied organizations that are registered charities. An immigrant rights nonprofit may be able to direct you to a trusted community organization that provides aid for immigrants in need, for example.
Be careful - sometimes well-meaning nonprofit staff will direct you to donate to an organization that isn't tax-deductible, or that doesn't provide charitable aid to groups you want to support. In America, there are many organizations that qualify for tax-deductible donations that don't actually do any charitable or even educational work!