With the number of charities increasing by 50,000 to 80,000 each year, it's no wonder that choosing where and how to donate can be confusing. Add to that the threat of fraud and it's easy to see why many Americans throw up empty hands instead of holding them out to others. But good works far outnumber bad ones; plus, there are plenty of ways people can research, fact-check and find help when it comes to figuring out how to make sure their money is making change.
Peter Jackson, president and CEO of Foundation Northwest, an organization that helps people gift their money by providing guidance and information, suggests that if a donor is gifting in the range of $20,000 or more a year, it's best to work through professionals.
"When you start giving at that level, you have to pay attention," Jackson says. "It's complicated, and there are smart ways to give." Jackson says a community foundation can help people make tax-wise gifts as well as advise them on maximizing the effectiveness of their support.
If the donations are smaller or if people want to do the work themselves, it's never been easier. The following tips were taken from GuideStar, an online network that shares information about the nonprofit sector. At GuideStar, potential donors can look up a nonprofit to see how much its executive director makes, how it spends its money, and how its previous year's tax forms shape up.
- Clarify Your Values: Before diving into the ocean of organizations, ask yourself what is most important to you: the environment, hunger, poor children, battered women, animal welfare? Are you looking for a local charity or a national organization? Do you prefer supporting a brand-new charity or a well-established one?
- Methodology: Remember to learn how the organization works. Do you want to donate to a group that provides immediate assistance, is centered on prevention, focuses on long-term training or education, or advocates public policy?
- Evaluate Legitimacy: If you find a charity on www.guidestar.org, you know it's legitimate. All nonprofits listed on GuideStar are either registered with the IRS or have provided proof that they meet the IRS criteria for charitable organizations. If not listed on the Web site, ask the organization for a "letter of determination," or if it's listed under a different name. If it is faith-based, ask to see its official listing in a directory for its denomination.
- Dismiss Inexact Fits: You can be picky. If an organization doesn't provide adequate information, refuses to discuss their finances and or programs, doesn't give you clear examples of its goals and the results it seeks, or uses rhetoric to veil inconsistencies about its work, then don't feel pressured to donate. There are plenty of worthy charities out there.
- Trust Your Heart: Using your head is important, but so are your instincts. Make sure you're not so focused on giving wisely that you lose sight of the reason you're giving at all. Charity, after all, comes from the heart.