Reprinted with permission from C&G Newspapers
Check Out Charities Before
Doling Out Dollars
CORTNEY CASEY C & G Staff Writer
Published: November 20, 2008
With the holidays and the year-end tax write-off deadline approaching, it's the prime period for Americans contemplating philanthropic giving. "Between Thanksgiving and New Year's is really when our Web traffic goes through the roof," said Sandra Miniutti, vice president of marketing for CharityNavigator.com, a site rating 5,300 of the nation's largest nonprofits based on their" financial health."" It's definitely when most donors are thinking about people making their annual contributions."
But with the economy in a state of turmoil, donors will need to be more discriminating than ever when it comes to determining where to direct their dollars.
To guarantee every donated penny is spent wisely, experts recommend consumers investigate organizations before opening their checkbooks.
According to Sharon Kirk, marketing specialist with GuideStar.com, a site providing information on more than 1.7 million nonprofits nationwide, the process begins with defining giving goals, either by selecting specific causes or identifying geographic regions of interest.
"You have to ask yourself what's important to you," she said.
Next comes research into a charity's legitimacy, made simpler by the Internet.
CharityNavigator.com uses Internal Revenue Service Form 990s to assess organizations' day-today performance such as how much is directed toward programs versus fundraising and overhead costs and the sustainability of their operations over time, which Miniutti called especially crucial considering the financial climate.
Ideally, charities should be growing at least at the rate of inflation, and have a rainy day fund comprising six months' to a year's worth of liquid assets, she said.
CharityNavigator.com also lets consumers know whether an organization has a privacy policy.
"When you make a contribution, the last thing you want is that charity to sell your name to another charity to another charity. That's how you wind up with a mailbox full of appeal letters," said Miniutti.
Another piece of information more donors are seeking these days, especially in the wake of the Wall Street bailout, is the salary of a charity's CEO, noted Miniutti.
"They want to make sure the top executive is reasonably compensated," she said.
In the Web site's public forums, "that's the No. 1 comment we see: Outrage over CEO compensation," she added.
While CharityNavigator.com rates organizations from zero to four stars, GuideStar.com declines to do so. Kirk said it's difficult to compare charities with dissimilar missions that are scattered across different geographic regions, where costs vary.
GuideStar.com culls information from IRS business master files, Form 990s, and if the charity is willing from the organization itself.
"We have every nonprofit that is registered with the IRS," said Kirk.
Some features are accessible only via a paid premium subscription, but many details including contact information and downloadable Form 990s are available publicly.
Some of the most well-known charities won't appear on sites like GuideStar.com or CharityNavigator.com. For instance, organizations considered churches, like the Salvation Army, are not required to complete Form 990s, nor are groups with revenues under $25,000 annually, said Kirk.
"The only way to get additional information is to go through the nonprofits themselves," she said.
Kirk said reputable charities willingly provide prospective donors with clearly defined missions and concrete descriptions of their achievements. Avoid supporting those that speak in vague terms or balk at sharing tax information upon request, she advised.
Miniutti recommends approaching charitable giving in the opposite manner one does investing in the stock market. Don't diversify; "just pick one or two charities and stick with it over time," she said. "In the philanthropic sector, it's better to concentrate your giving."
Doing so, she said, allows donors to keep better tabs on an organization's efforts and success while helping the charity reduce its overhead and fundraising costs.
With economic troubles impacting nearly every facet of American society, Miniutti said charitable donations are likely to take a hit.
"The research shows that in times of recession, giving drops about 1 percent in America," she said." We're expecting giving to be down at least that much this year."
Nonetheless, it's somewhat surprising how many Americans continue to support charities even amid times of financial hardship, she said.
This year in particular, Charity Navigator.com is advocating that people consider donating to organizations helping the less fortunate, such as food banks, said Miniutti.
A substantial number of those types of charities have reported declines in donations; at the same time, food costs have increased and "demand has gone through the roof," she said.
Further compounding the problem: In the lagging economy, many of such organizations' past donors have been forced to become their beneficiaries.
"That's a huge problem in and of itself," she said.
The Michigan Attorney General's Office's Charitable Trust Section also fields questions from consumers who want to verify a charity's legitimacy, call (517) 373-1152.
You can reach Staff Writer Cortney Casey at ccasey@candgnews.com or at (586) 498-1046
Copyright, 2008, Rochester Post (MI), All Rights Reserved.