What You Should Know About Donating To Charity for 2016

Image: Shutterstock

Image: Shutterstock

Did you know that people in the United States donated more than $350 billion to charities last year? Tax-exempt organizations are the fastest growing sector in the U.S. economy as over 60,000 new charities are formed each year. With over 1.6 million nonprofit organizations, the competition for funds has become quite intense.

Yes, donating to others is a wonderful opportunity to give back to the world that we take so much from. However, it’s important to do your research before doing so; with more than 1 million charities and countless causes to pick from, deciding where to donate your hard-earned money can be quite difficult.

Below are some questions you should be asking organizations to determine where your money will do the greatest good. Make sure you’re prepared for 2016!

How do I find the right local charity?
It’s important to make sure the governing board has at least 4-5 independent members who make up the voting majority. “You don’t want to see a situation where the board includes the CEO’s husband, daughter, and son-in-law,” says Bennett Weiner, chief operating officer of the BBB Wise Giving Alliance. An alternative? Pick a national charity that works on the local level – this can ensure that your donation is going directly to a nearby community that needs it.

How do I check if a charity is legit?
If an organization is a nonprofit, it’s been granted tax-exempt 501©(3) status from the IRS – churches/nonprofits with less than $5,000 in revenue, however, do not have to register).

In addition, check out websites like CharityNavigator.org, Give.org, and GuideStar.org. These websites will provide information on charities’ spending habits and transparency (is the company open about what they’re doing with the money that actually goes to the cause?). Nonprofits should spend 35% on admin and fundraising costs and the rest should go to charitable initiatives.

How does the charity use my contribution?
The Council recommends that at least 70% of a charitable organization’s total expenses should be used for program services. Fundraising and administrative costs are necessary to an average organization, but donors should expect that a substantial amount of their contributions is used for the company’s program services.

Important questions to always consider:

Is this a mission I am personally committed to supporting?

Do I feel this charity’s accomplishments are significant?

Are the charity’s priorities my priorities?

Does this charity work to raise public awareness about a cause I feel strongly about?

Do you have other suggestions when finding the right charity? Leave a comment below! Happy New Year everyone!


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