Tips For Ensuring Any Donations To Charity Are Actually Going To The Right Place
Donating to charity is important to many people for many different reasons. No matter what cause you support or how frequently you're able to donate to support it, the most important thing is that you know that your donations are being used by an organization as you have intended them to be used. Unfortunately, that isn't always the case, and some organizations prey upon the generosity of strangers for their own benefit or use the money provided by their donors to line the pockets of their executives.
The issue is common enough that the United States Federal Trade Commission (FTC) provides its own guide on avoiding charity scams, but even big-name nonprofits — while not scams in their own right — might not be using your donations in the way you think they are. With all of that in mind, here's a helpful guide for you to ensure that your charitable donations are going to the right place.
Pick an organization to support
First, naturally, you need to choose which organization (or organizations) you want to support with your donation. You might already have an organization in mind that you or someone you know has been supporting for years, or you might need to figure out what organizations are out there for the cause that you want to support.
Elisabeth Dawson, founder of COPIA Wealth Management, explained to Self that part of this also involves knowing what your own beliefs are first. "You [want to] know your donation is going in the right direction, aligned with your beliefs," Dawson said. "Do your homework and read their mission statement and goals."
Figuring out what matters most to you in an organization will help you in narrowing your search. Depending on the organization to which you'd like to donate, this might mean that its political or religious affiliation lines up with your own or that it works predominantly within a specific community, for instance.
Make sure that the organization is legitimate
Once you've decided which organization you'd like to support, it's important to make sure that it's legitimate. To do this, you should check to see if the charity is registered in the jurisdiction in which it is based. While some legitimate organizations might not hold 501(c)(3) status in the United States, as described by the Internal Revenue Service, confirming that an organization is registered as a 501(c)(3) is a good indicator that you are not dealing with a scam.
Some countries other than the United States maintain lists of their registered charities, such as those provided by the Government of Canada, GOV.UK (for England and Wales), and the Australian Charities and Not-for-profits Commission. This is also the case for some U.S. states, and the National Association of State Charity Officials (NASCO) lists who in the state government is responsible for overseeing charities in each state.
Do some digging into how the organization uses its donations
After confirming that the organization to which you would like to donate is legitimate, it's time to do some more research on it. For the United States, at least, there are multiple websites on which you can search organizations by name and learn more information about them. The Federal Trade Commission (FTC) specifically recommends BBB Wise Giving Alliance, Charity Navigator, CharityWatch, and Candid as places to start.
When looking up a charity, many websites will allow you to see where their finances are going. Based on this information, you can determine if you would like to donate to that organization or if you feel that your donation would be better off going to a different organization.
In the U.S., Form 990 from the Internal Revenue Service (IRS) can be a good tool for gaining insight into an organization too. "If you are really into the numbers, you can look up an organization's Form 990 on Guidestar, which is a financial report that most accredited nonprofits are required to file with the IRS annually," wealth advisor Holly Mazzocca also suggested to Self.
Seek out reviews from others
In addition to looking up information on the organization to which you'd like to donate and its finances, you should also look for reviews from others. Whether those are reviews from donors or from beneficiaries of programs that have been provided by an organization, you should check outside of that organization's own website or testimonials to try to eliminate some possible bias. The website Great Nonprofits provides space for donors to review nonprofit organizations, and you might be able to find additional reviews through other platforms, which could include Google Maps or Yelp reviews for a building related to the organization in question.
While speaking with Self, Holly Mazzocca recommended either talking to those you know about the organizations to which they've donated in the past or contacting staff members of an organization to get their feedback. "People are truly passionate about the organizations they love and are always willing to take the time to tell you more," Mazzocca said.
Report anything suspicious
Lastly, if you've found something that smells a little bit fishy about the organization that you had been wanting to support, don't hesitate to report that information to the appropriate authorities. Whether the organization isn't a registered charity but claims to be or you find that something else seems to be going on as you do your research, it's important to make sure that no one else is duped or otherwise put in harm's way.
In the United States, you can report fraud to the Federal Trade Commission (FTC) via its website. To report a complaint to the Internal Revenue Service (IRS) about a tax-exempt organization, such as a 501(c)(3), its website notes that you can use Form 13909, also known as the Tax-Exempt Organization Complaint (Referral) Form.
If the organization you're reporting is outside the United States, check with the procedures provided by the relevant regulatory body for charities located in that jurisdiction for guidance.