Looking for Help Choosing a Charity? Here's Some Help!

reveurgam (60)in #nonprofit • 6 years ago (edited)

Do you want to find a charity to support, but don't know where to look? It can be pretty confusing sometimes and some of the more well-known charities may not actually be that good at using your money the right way, so you need to be careful! Below, I've come up with a short list of resources and suggestions to teach you about donating, how to choose a charity, places that list, evaluate and/or score non-profit organizations (NPOs), websites that give you access to NPO's 990 tax forms, and so on. I hope this will be of use to you!

Updated version of this article here.

stylized hands holding a symbolic heart on red background

Things to Consider

Criteria

Top executives' salaries - average nonprofit CEO pay in 2016-17 is $138,815 according to the 2016-2017 Nonprofit CEO Compensation Study, but some CEOs earn $500,000 or even more than $1mil! Percentage-wise, that large amount is a tiny portion of the donations, but is it really justifiable?
The ratio of money that is spent on overhead versus the mission (35% or less is best according to the BBB's WGA).
The amount of overhead that is for fundraising vs salaries vs other expenses.
How much of the money used for the mission is actually used for other purposes or misused.
Does the organization have a history of misuse of funds or other scandals?
How much they keep in reserve (most of it should be flowing directly into what their stated purpose(s) is).
If a charity acts too much like a business, it is in violation of laws about NPOs, so be careful to check that out,. especially if money brought in is distributed to owners as dividends. Nonprofit Self-Sustainability: Which Charities Act Like Businesses?.
Where the donations come from.
The ratio of money from private donors vs foundations vs corporations vs business income.
Does the NPO have a board of directors, who's on it, are they active, and how many are there?

Evaluators like Charity Navigator, the BBB and others have much longer lists of criteria, some of which cannot be assessed without direct input from the charity in question. Here's

and the BBB's WGA's details about the criteria.

Keep in Mind:

Need to Know

If you're looking for information on a specific NPO, you'll need their name or IRS Employer Identification Number (EIN) and you may need their HQ's location if, like Prevent Cancer, there are numerous locations with their own EINs.

They're Not All the Same

Also keep in mind that foundations, non-profits and not-for-profits are different. The former 2 have 501(c)(3) status, while the latter doesn't. Most schools have an educational tax-exempt status and even school PTAs can set up to get an EIN!
Difference Between Nonprofit and Not for Profit Organization
How is a charity different from a foundation?

Federal & State Status

Any non-profit will need both an EIN and a State tax-exempt number/status, but this is according to each State's laws for charities. A charity operating only in one state or part of a state will only need the Federal and State certifications. Some states, however, are very strict, even about passively received donations (such as a donate button on an NPO's website, or an individual's fund-raiser), so it can get complicated quite easily! Yet, other states are very lax. There is no standard, so if you want to know if a charity you're looking at is operated correctly, you'll have to learn the laws for the state they're in, plus any other states they operate in. The confusion includes such things as receiving the results of fund-raising events in another state or taking part in an event in another state and receiving donations while in another state.

One thing is clear - any charity that is soliciting donations but does NOT have an EIN is breaking federal law!

It's best to make sure your NPO has 501(c)(3) status that hasn't been revoked, because your donation won't be tax-exempt for them, and you won't be able to claim it if you do lots of donating. Of course, don't forget that you need a receipt to claim a donation on your tax form!

Viewing an NPO's 990 Tax Reports (USA only)####

The IRS and ProPublica Nonprofit Search all offer the 990 tax forms of non-profits, and some of the sites listed above do, too, such as GuideStar. Take note that there is a short version, the 990-N, which will not be accepted by NPOs seeking listing by evaluators of large NPOs only, because it doesn't provide much info (it's supposed to take 5 minutes to fill out). Please also be aware that 990s are PUBLIC documents and any charity that refuses to release them (or violates other laws/rules) upon request should be reported to the IRS using the Form 13909 Tax-Exempt Organization Complaint (Referral).

Resources

One decent resource is Tactical Philanthropy, which has articles and discussions that teach you how to evaluate NPOs, but is no longer maintained as the creator has moved on. The Foundation Group helps NPOs with legal matters and may have resources you can use. Most of the websites I've listed here have extra resources - for donors, charities and/or foundations.

Avoiding Scams

There are plenty of con artists out there, and they don't just use IRS , computer, car warranty and vacation scams - some specialize in pretending to be charities to rip you off!
Avoiding Charity Scams: Questions to Ask & Ways to Give

Crowd-funding

Maybe you are cash poor but want to help. Fundraising is an option, then, although you might want to look at your state's laws and see if they're laxer about online efforts instead of having a bake sale! Lots of charities use platforms like Indiegogo, Kickstarter, RocketHub, Crowdrise, GoFundMe (GFM) and so on (I did research back in 2015 and found over 100) exist. The ones I listed just now are all generalists, but there are some that only collect for certain types of causes, while others are not genuine crowd-funding sites but use a hybrid platform between fundraising and selling. GFM recently bought out some of them, including YouCaring.org, which was one of a small number of crowd-funding sites that didn't charge fees (but, don't worry, others still exist!), and absorbed them. Oddly, while GFM is listed by PayPal Giving Fund (PPGF) as providing free fundraising for non-profits, the truth is that if YOU start a crowdfunding campaign for a non-profit, they won't charge any fees, but if a charity wants to start its own campaign, it must pay. However, if they do this on GFM through the partnership with PPGF, PayPal won't charge a fee.

For that matter, some social media platforms, like Facebook, provide the option to run a campaign on behalf of an organization, and there are other companies that dovetail their services with donating (such as Giving Assistant and Amazon Smile - see below).

Disclaimer

I haven't examined most of the resources personally, so please check them out and analyze them. If someone wants to fund my researching all, some or one subject thoroughly, I am unemployed and could use the cash. Most of what I know is what I learned while working for a small NPO in 2018.

Websites

Evaluators and Listers that Provide Info and/or Ratings

The following organizations list charities (although some have very strict guidelines and will only list LARGE NPOs that fulfill a lengthy set of criteria), and some of them make it easy to determine which are the best-in-class for donating to. The information may include 990 tax form info, evaluations, self-reported info from the NPO, and rankings/ratings/scores based on evaluations, self-reporting or both. Some allow you to donate to a charity through their website. Some only list organizations involved in a particular type of cause. A lot of them offer resources for donors and/or non-profits, and give advice on how to choose an NPO. Some of them allow you to look at as many organizations as you want, while others will limit your access to info or the number of NPOs you can view per day, and some try to get you to become a member in order to get better access. Those that only rate large NPOs won't be of much use, if any, if you're looking for info on small NPOs. Note that each evaluator uses its own criteria and tests! This list is not meant to be exhaustive - just to give some resources to help donors.

Animal Charity Evaluators& evaluates only animal charities.
Charity Attributes by OrgHunter shows adjectives chosen by each NPO.
Charity Navigator& evaluates, provides info and rates on large orgs, and they also list smaller orgs but don't evaluate them.
Charity Watch& looks at large orgs only and works pretty much the same as CN and WGA
Geneva Global accepts a donor's request for a report, then evaluates and reports on 3 years of a charity's activity, and takes a percentage of the donation.
GiveWell& evaluates large orgs only and is an American non-profit charity assessment and effective altruism-focused organization. GiveWell focuses primarily on the cost-effectiveness of the organizations that it evaluates, rather than traditional metrics such as the percentage of the organization's budget that is spent on overhead.
Great Nonprofits&
GuideStar&/GuideStar UK is used by many other orgs and companies, including PayPal and TechSoup, to determine if a charity deserves support. Although many companies rely on GuideStar, that doesn't mean they're the best. GuideStar uses a combination of their evaluation of an NPO's 990 tax forms and what the NPO self-reports, and the bronze, silver, gold or platinum star is based not on their evaluation but on the self-reported info. It is a good starting point, though, and they offer many resources you can learn from. They also offer Philanthropia (below).
Ministry Watch is an independent evangelical Christian organization whose purpose is to review Protestant ministries for financial accountability and transparency, and to provide independent advice to Protestants considering making donations to them.
OrgHunter doesn't give a rating, and doesn't really provide much that is evaluative; the NPO must self-report, and OH lists 990 info. They also offer a separate page for the nonprofit to modify, plus an app, and an additional resource, Charity Attributes (above). It's fine for a starting point to compare with more comprehensive and useful sites.
Philanthropedia& by GuideStar& rates verified, financially responsible charities according to how much great work they're doing.
Wise Giving Alliance& by the Better Business Bureau&examines large orgs only and has a fairly critical list of criteria that it considers before it rates them, plus it also has some charities listed on the BBB's website, too, and you can read reviews written by people.

& = Indicates that it is a 501(c)(3) non-profit organization.

Businesses That Offer Free or Discounted Services to Nonprofits

eBay users can donate each time they purchase here.
GoFundMe offers crowd-funding for a fee but, if the NPO is listed on PayPal's Giving Fund, PayPal won't charge a fee on funds raised.
Google for Nonprofits (charities are evaluated by TechSoup&) The whole process is a bit convoluted but well worth it for an NPO to go through due to the benefits, which include G-Suite Basic, Google Earth and event-mapping, YouTube, Google Donation Tools, and Ad Grants.
Microsoft for Nonprofits offers discounts on products and services, partnerships, and in-kind donations of cloud-based products.
PayPal gives a reduced fee to charities & PayPal Charitable Giving Fund& charges no fees for PayPal users who donate, plus has partnerships with eBay, Humble Bundle, and GoFundMe.

Intermediaries:

Amazon Smile is like Giving Assistant, but it's only for Amazon and it donates a portion of their profits to the charity of your choice
Giving Assistant& lists orgs and has them complete their profile, then allows the user to choose which org to automatically donate to each time you buy online at over 2,000 shops through Giving Assistant, plus they have the Giving Assistant Button app to help make it easier, and they offer deals and coupons on their partners' products.
Giving What We Can& by the Centre for Effective Altruism& gets philanthropists to be members who donate to NPOs. GWWC is an altruism associated organization whose members pledge to give 10% of their income to effective charities.
GoFundMe offers no-fee crowd-funding for people who want to raise funds for a non-profit organization.
Humble Bundle works by donating to the charity of your choice when you buy software through them, and they offer deals on their partners' products.
National Philanthropic Trust gets philanthropists to be members who donate to NPOs. It is an independent public charity specializing in "tailored philanthropic solutions" for individuals, families, companies and foundations.
Network For Good uses Charity Navigator and the BBB's WGA, and lists over 1 million orgs and accepts donations without a fee. It is a Certified B Corporation software company that offers innovative, easy-to-use fundraising software and coaching for charities and non-profit organizations. The company was founded in 2001 by America Online, Cisco Systems and Yahoo! and has processed over $2.2 billion in donations since inception. They also offer a free version of CRM software to eligible NPOs, as do Salesforce and many other CRM/DRM makers.
Shoparoo produces an app (Apple Store, Google Play) that accepts receipts from many types of businesses, awards points based on the amount spent, assigns those points to the user's chosen school, and donates money to that charity based on overall points. They do this by conducting research on the users and selling the data to companies. FAQs.