by Brian Backe
It is that time of year when a little voice in our head reminds us that it is time to start thinking about giving to charitable nonprofits doing good work in our community and world. Sometimes there is another voice in the background asking, “How do I know they are doing good things with my money?”
After 40 years inside the nonprofit world as a senior manager, board member and adviser working with more than a dozen nonprofits, I know this can be a complicated decision. So, I spoke with a few of my nonprofit colleagues and assembled this step-by-step approach:
Step one: Make a list of the nonprofits you are giving to or considering giving to — the tried and true ones from the past, plus any new ones that have come onto your radar over the past year.
Step two: Ask yourself: Does their mission speak to me? Does it align strongly with my values, faith, personal mission in life or simply reflect how I want the world to be?
Step three: Find their website and search for their annual report. Or go to one of the independent charity watchdog sites (such as candid.org, charitynavigator.org, charitywatch.org and givewell.org) and search out the organization; you can often pull a lot of information for free, including the group’s federal tax forms.
Step four: Look at the programs and geography and whether they align with your interests. If you can’t see the impact firsthand, does the group have a reputation for good work from someone you trust? (Let me make a quick pitch for supporting causes nationally and internationally, not just locally, as there are pressing needs across the globe.)
Step Five: Check out the staff and board leadership. The CEO is key to ensuring well-run charitable programs and services, just like in business or government. Look up the executive director’s bio, typically under “About Us, “Leadership” or “Our Team” on an organization’s website. Good nonprofit leaders come with both big hearts — they are mission-driven leaders who want to serve — and also good heads for the business of running a complex organization. If you are a major donor to the charity, you can ask for a quick conversation with their CEO or Development Director. You can also scan their Board list to see who you might know and note what companies or groups they represent. A highly engaged independent Board of Directors provides essential leadership and oversight for the organization, ensuring public trust in the charity.
Step Six: Consider programs versus overhead spending. One the big questions almost everyone wants to know is this: “Are they spending my donation well?” This one might surprise you, but I don’t think donors should get hung up on the “overhead rate,” the combined amount spent on management/general administration and fundraising to keep the organization running. One commonly used rule of thumb is that charities should spend 80% or more on programs and 20% or less on overhead. Anything far north of 20% is worth a closer look. That said, too little overhead is a problem. As a donor, you actually want your charities to spend some of your contribution on overhead so they can track your gifts well, maintain an independent oversight board and fundraise efficiently to stay financially healthy in the future. You also want them to attract a skilled executive director and pay them a fair but reasonable salary so they can stay for a long enough period to implement the program effectively.
(Bottom line: If you are concerned about their overhead rate or anything else, give them a call or send an email. Good charities welcome transparency and will answer any questions whether you plan to give $10 or $10,000.)
Step Seven: Just make the gift! OK, this all may be too much effort. So just go ahead and make a modest “unrestricted” (to be used as needed) gift to a charity that fits your values and vision for the world, in whatever amount you can afford. You will get to know the organization better over time and can dig in later before giving at a higher level.
In the end, giving to charities is one tangible way you can advance your personal vision for making the world just a little bit better.
