Ways to Stretch Your Charity Gift Dollars

Charity fatigue syndrome:  a condition in which normal feelings of compassion for other human beings are replaced by feelings of annoyance, frustration, guilt, exasperation, and a general malaise caused by too many requests for donations.  Sometimes it feels like everyone is asking for a handout!

When I lived in New York City, it seemed you couldn't walk half a block without encountering a homeless person trying to panhandle for spare change.  After a while,  I stopped giving them my money.  There were just too many of them, so what good was it to give a couple of dollars?  It didn't get them off the streets.  This is the key question when considering charitable giving:  what result is my donation going to get?

Now, I view charitable giving as a kind of investment. Just as I expect some kind of return on our financial investments, I also must expect a good return on our charity money. The bible says, "Do not store up for yourselves treasures on earth, where moth and rust destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where moth and rust do not destroy, and where thieves do not break in and steal. for where your treasure is, there your heart will be also." (Matthew 6:20-21) My belief is that giving and doing good towards others are like adding capital to your heavenly account. In karmic terms, the good you do comes back to you!

It's up to us to discern and evaluate the charities that we choose to donate to. Just as the government has been investigating some of the shady business practices of the big banks, including executive salaries and bonuses, so we must investigate each charity to make sure our money is going to get the desired result. I want my money to go straight into feeding the hungry, not towards excessive administrative costs.

www.charitynavigator.org

I discovered Charity Navigator a couple of years back. It's like a Consumer Reports for charities. Their professional staff reviews the financial operations of thousands of charities and rates them. You can look up a charity that you are considering and get an idea of how well that charity performs its stated mission. It has been an excellent tool in evaluating the potential return on our charity giving. Here are some tips they give on their website to help us be savvy "investors" with our charity dollars.

1. Make a giving plan

Instead of being put on the spot by solicitors asking for donations, take some time once a year and plan your giving. Choose the causes that speak to your heart, whether it be children's ministries, or finding a cure for a disease that has affected your family. Do the research on Charity Navigator and find 1-2 organizations that fit the bill. Then decide on amounts you want to give, and a "payment" schedule that works for you.

We usually budget an annual amount for the American Red Cross, which is our designated charity for addressing natural disasters like the Haiti earthquake. Since we've already planned for it each year, when something happens, we just go online and send it in right away.

2. Eliminate the middleman and never agree to a phone donation

There are for-profit fundraisers that are hired by charities to do telemarketing/cold calling. These middlemen collect 25-95 cents of every dollar they collect! Don't ever give personal information, credit card number, or Social Security number to anyone over the phone. If their pitch sounds like it may be a worthy cause to you, politely ask for the charity's contact information or website so you can do your own investigation of its merits. A direct donation to the charity ensures that 100% of your money gets to them instead of the middleman.

3. Beware of knock-offs and imitators

Informed charity donors do not allow themselves to get confused by similarities in charity names.  "Children's Defense Fund" is not the same as "Children's Charity Fund."  The first one is a 4-star organization; the second has 0 stars.

4. Only donate to confirmed 501(c) charities

501(c) organizations qualify for tax exempt status. That means your donation won't be diminished by taxes. It also means the organization meets IRS rules which exclude private interests from profiting from the organization's activities. Savvy givers know the guy collecting change in the supermarket parking lot may not qualify as a 501(c) charity; only donate after checking credentials.

5. Check the charity commitment to donor's rights

The upstanding charities have a donor privacy policy, much like the banks and credit card companies have. They should respect the donor as a partner in their endeavors. This privacy policy should allow the donor to "opt out" of having his information shared with other entities.

6. Look at the charity financial records

The financial health of any charity is a strong indicator of their performance. We should evaluate a charity with the same scrutiny we evaluate our investments. Does it spend the money wisely? Does it budget and plan according to economic and market conditions? Will it continue to grow in the future?

Called a Form 990, a charity financial report shows how efficiently the funds are used. Well-managed charities keep their fundraising and administrative costs to a minimum, 25% or less, while 75% or more of the money goes straight to the programs and services they provide to the needy. The report will also show if the group has been able to grow income or revenue over time, which is a sign of a healthy business.

7. Review executive compensation

Compensation for CEO's should be evaluated in context. I've known CEO's who are worth their weight in gold. I've also seen CEO's that have run the company into near bankruptcy. Contrary to what the politicians are claiming, high salaries and bonuses are not an evil. If you deliver the results you were hired to deliver, you should get paid for it. Evaluate CEO compensation based on the scope and the complexity of the job, and above all, performance.

8. Review program results

Before you make a contribution, research the charity to learn about its accomplishments, goals and challenges. Call their contact number and talk to someone if you have unanswered questions.  Be prepared to walk away from any charity that is unable or unwilling to participate in this type of conversation.

9. Concentrate your giving

This really helped us in our approach. By focusing on a pre-selected 2-3 charities, we are able to budget our giving. Not only is it more efficient for us, it's more efficient for the charities. As each charity is using a percentage of your gift on fundraising and overhead expenses, spreading your gifts across dozens of charities just multiples this wastage.

Plus, we feel like it's something substantial when we can give more to our chosen charities. And it makes it much easier to say "no thanks" to other solicitations without feeling guilty.

10. Make giving a long term commitment

A couple of years ago, we became sponsors for a girl in a Russian orphanage through our church. In doing so, we became a partner with the charity - now we have great interest in how things are going there, knowing that our action or inaction will directly affect this young girl and her caregivers. We use automatic deduction to insure we will never miss a scheduled payment - these people are counting on us! It's a much different feeling than just writing a check to some unknown place and not ever thinking about it again. All I can say is, it's a really good feeling. A blessing.

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Comments 2 comments

The Rope profile image

The Rope 6 years ago from SE US

Excellent advice "DF"! Thanks for sharing and laying out such a straightforward step by step process.

(I have a whole different take on that particular passage but that's another story.)


dfelker profile image

dfelker 6 years ago from Southern California Author

@The Rope -- Thanks for the kind comment!

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