It’s the time of year when our thoughts turn to giving. Often though, it’s our gut that does the giving, and that may not be such a good thing.
While there are lots of great causes to contribute to, they don’t all define and accomplish their goals with equal effectiveness. And many are not as efficient as they should be—meaning that an unnecessarily large chunk of your donation will go to overhead costs like administration and fund raising.
My advice: Give, but do your homework first. There’s probably a cause or a specific charity that resonates with each of us, and that’s a good place to start. Check out charities’ websites carefully, looking beyond the emotional words and images for evidence of clear and measurable goals.
Does a healthcare charity want to provide free screening for 1,000 people in a particular area in the coming year? Does a local organization want to build 2.5 miles of nature trail? Goals that are quantifiable are more likely to be achieved.
As for overhead expenses: Every non-profit has a certain amount of overhead. But those whose expenses are 20% or more of their total revenue should have a good explanation as to why that’s the case. You can find financial information on a great number of non-profit organizations on sites like CharityNavigator.org or Guidestar.org.
To get a fuller picture of an organization’s effectiveness, you can also turn to the actual beneficiaries as well as your fellow donors: Their reviews and feedback can be found on sites like MyPhilanthropedia.com and GreatNonprofits.org.
Keep in mind that focusing your giving may be the most effective way to have an impact. Every donation you make carries certain fixed processing costs. If you make large gifts to one or two organizations, the cost will be smaller as a percentage of the totals. Conversely, if you split your contribution into smaller gifts for multiple organizations, the processing costs added together will diminish the total amount of your money that goes to doing good work.
Finally, remember to get receipts! You might think of the tax deductions you’ll receive as a holiday gift to yourself.
