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How To Find Out Details About If A Nonprofit Is Trustworthy
How do you know if a cause is worthy?
You want to give to charity, and you can afford to donate money. But you don't have so much money that you can give it away with abandon, and the amounts you have to donate don't get you the kind of personal time and attention that charities lavish on major gifts donors. You don't have your own private foundation with a staff, and you don't even have a donor advised fund at a community foundation or somewhere like Schwab Charitable or Fidelity.
Fear not! That doesn't mean you are stuck only giving to your alma mater, to your church, to whichever mainstream nonprofit sends you a direct mail solicitation asking for $15.
There are new tools available to kitchen table donors like you, wherever and whoever you may be. The Internet is a great equalizer.
All you have to do is know where to go, what kind of information to look for and, if you like what you see so far, what questions to ask of the charity itself to make sure it really is doing the kinds of programs and work that matter to you. Whether a charity works in the arts, education, social services, hunger, poverty, international development or environmental arenas, you can find new, exciting groups doing great works and that you want to support and that would welcome your support, if only you knew how to find them.
Step 1: Online Resources To Vet Nonprofits
Your best friend as you start to research if a cause or a charity is worth your hard-earned money and time is the Internet.
There are a number of websites that exist just to help people like you find out if a nonprofit is any good or not — if it is well-run, if it is big or small, if it is stable and respected.
Charity Navigator: This free website service rates charities on a four-star system, similar to how Morningstar rates bonds. It mostly looks at how much of its budget a nonprofit spends on its programs and how much on its administration, which is one way to look at a nonprofit's efficiency, but doesn't say much about the organization's effectiveness. Nevertheless, Charity Navigator is easy to use and is a very good place to start to get a basic sense if a charity is any good since it has a huge database of listed charities. A group with a one-star rating, for example, should raise red flags that something is not right. It also has useful Top Ten lists that slice and dice all kinds of data.
Philanthropedia: This is a charity rating website similar to Charity Navigator, but rather than rely on a not-always-fair ratio of program costs to administrative costs, Philanthropedia turns to the wisdom of crowds and crowd sourcing to get a more accurate and holistic appraisal of whether or not a nonprofit is any good and is worth your support.
Better Business Bureau Wise Giving Alliance: Yes, the Better Business Bureau has an arm that checks out and rates charities. It works a lot like the Better Business Bureau does, with seals, reports, and a place to file complaints.
Guide Star: Guide Star is invaluable if you want to dig deeper in to a charity's finances. It has on its website the IRS Form 990s that all charities with annual budgets over $250,000 are required to file with the IRS. These forms tell you how much the nonprofit pays its top staff and contractors, how much it spends and how much it brings in, what sorts of assets and investments it has — everything you need to get a sense of an organization's financial health.
Great Nonprofits: This is the Yelp of nonprofit information sites. Here people can write about an experience they have had with a charity — as a donor, as a volunteer, as someone who has worked there or used their services. Because it is all user-generated, there are lots of very small, grass-roots organizations featured here.
Step 2: Dig Deeper, Make Calls, Do Research
You can use social network sites like Facebook to check out nonprofits and get a sense if they are legit. Most charities have a Facebook presence, though some are more active than others. And be smart and pay attention since a really crooked nonprofit could snow thousands and thousands of fans, mismanaging money without them knowing.
Most of the time, however, if a nonprofit has a sizable following on Facebook of people who are deeply engaged and passionately involved with it, then chances are it is above board and at least reasonably well-run.
Facebook Causes also helps charities raise money online.
Another terrific place to turn for information is your local community foundation. They might not have a lot of time to really sit down with you and discuss your charitable goals and offer you guidance if you do not have a fund with them, but since their primary mission is to funnel aid to their local communities, they know about what local nonprofits are doing good work and could use your support.
Even if the community foundation won't give you direct advice or suggestions, do not despair! Ask for a copy of their annual report to see which nonprofits got grants from the community foundation, as most of these are probably pretty good.