Signs You’re Donating to a Reputable Charity

Ian Ruzow
Ian Ruzow
Sep 7, 2018 · 3 min read

Charitable donations are an effective way to make a difference in your community. When choosing a charity, you should make sure you research potential organizations before writing a check. It’s important that the charity you choose is a reputable one. How can you tell which charities deserve your donation? Many factors go into such an assessment, but here are three things you can evaluate before making a decision.

Transparency

If a charity is hiding reports or deflecting questions that probe into their spending habits, be cautious. Trustworthy and worthwhile charities will be open and honest about their revenue and how they spend their money. Organizations should be able to inform donors how their donations will be spent. You should also be able to access information pertaining to who makes up their board, how much employees make, and how much the organization has raised to pursue their goals. Don’t settle for uncertainty; reputable charities will not try to hide any relevant information you, as a donor, would want to know.

Use of Funding (75/25 allocation)

In an ideal world, 100% of charity funding would be used toward their goals, but fundraising and supporting an organized administration costs money, too. Some experts suggest that there should be a 75/25 spending ratio (where 75% of the funds are used for the charity’s goals) for it to be considered reputable. Regardless of the exact percentage, most of a charity’s funds should go toward its mission rather than to the pockets of its employees.

Fulfillment of Mission

How well does a charity accomplish their goals? Inquiring as to the methods and allocation of funding toward specific goals should shed some light on this matter. Successful, reputable charities will be able to identify clear ways they use their funding to accomplish their mission. Rather than simply saying they want to “alleviate the suffering of cancer patients,” they might be more specific and say they are funding independent research and are financially supporting sponsored patients. Be on the lookout for organizations that remain vague in their answers; high quality charities will be able to break it down for you and tell you just how your money will be put to use.

Determining whether a charity is reputable or not is easier now than ever. Websites like Charity Navigator assess charities based on a number of factors including their documented activities and their financial statuses based on IRS documentation; by doing this, they have created a ranking system which classifies charities in a way that makes it easier for potential donors to evaluate them.

If you are going to donate to a charity, you should make sure it is reputable and that your funds will be used to fulfill a worthwhile mission. Being aware of traits like transparency, funding allocations, and existing success in reaching goals will help you make an informed decision.


Originally published at ianruzow.org on September 7, 2018.

Written by

Ian Ruzow

Ian Ruzow is an entrepreneur in Lancaster, PA. He is currently a Partner with Oak Tree Development Group. http://ianruzow.org.

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