5 Tips for Choosing a Charity

Making a donation to benefit a cause is a fulfilling way to give back to those in need. Often popular during the holiday season, birthdays and other seasonal celebrations are now also becoming occasions for people to contribute. You may love this idea and want to do the same, but wonder how somebody goes about choosing a charity. It turns out that the top charities may not always be the best charities to send your dollars to if you want to make an impact. Here are five tips for how to choose a charity.

1. Discover the causes that mean something to you: Consider your personal interests and what means the most to you. Is there a cause that you are particularly passionate about? It may be easy to automatically default to a large and well-known national organization, but a quick search is well worth your time. You may find a charity that more specifically addresses the issues you wish to support and that is a better match for what you are looking to accomplish.

2. Check out what’s near you: Learn more about the local charities in your area. This opens up the opportunity to make a difference through means other than a monetary contribution. Drop by a local organization and ask if they are looking for volunteers or community outreach. You may feel a strong tie to a charity close to home which can make the experience especially meaningful.

3. Understand “overhead ratio”: A key piece of information that most people want to have before they donate is a charity’s overhead ratio, i.e. the measure of how much of each donation is spent on “programs” versus administrative and fundraising costs. It is undoubtedly useful to have an idea about where your money is going, however, there are caveats to using overhead ratios as the only measure to guide your choice of charity. The rules for determining them are vague and, in some cases, achieving a low overhead ratio can lead to behavior that is counterproductive to a charity’s goals.

4. Look at effectiveness: While the idea of sending money “straight to the beneficiaries” is tempting, what you really are looking for is effective spending. Choose charities that demonstrate effective programs that have a real impact on the people they are trying to help. A well-managed organization is better positioned to make a difference than one that is not investing in tools and expertise to set up effective programs. Considering more than financial ratios is crucial to getting a complete picture of a charity so you can make a smart choice. The following websites provide helpful online tools to help you complete your charity check.
   1. Guidestar (www.guidestar.org)
   2. Charity Navigator (www.CharityNavigator.org)
   3. GreatNonprofits (www.GreatNonprofits.org)
   4. Philanthropedia (www.MyPhilanthropedia.org)
   5. GiveWell (www.GiveWell.net)

5. Give back!: With the right charity, you can make a real impact on a cause that is important to you. If you want to learn more, pick up the phone or write an email to your charity of choice and talk to them about their work. No matter whether you are donating a small or large amount, give wisely and you can be sure that your generosity goes as far as possible.