Are You Vetting Nonprofits Before You Give?

Giving to charities is a great way to help out the community and make the world a better place– until you find out that the charity you donate to actually doesn’t use all of the money that you donated. In fact, many charities actually spend more money paying volunteers, fundraisers, and operators than they donate to organizations. If you’re an advocate donor, it’s important to choose your charities carefully. Here is what you should look out for to ensure your gift is supporting the most of the organizations.

Program Spending

One of the first places to decide if you should donate to a specific charity is to see how they spend their money. For example, many charities will say that $1 of every proceed will go to that specific charity, while others don’t disclose this information. A good idea is to your research and read the fine print when donating to charities. Every non-profit organization has to fill out a 990 form with the IRS which will disclose how much money they will spend on costs throughout the year. This will also disclose where the money is going and whether or not the program is spending their money as they say they will.

C-Level Compensation

Another tricky thing that is rarely disclosed is the compensation of workers and c-level executives. For example, these are the highest paid non-profit CEOs. But where did that money come from? Donations. This is also another reason why it is important to do your research before you decide who to give to. Other employees may be getting paid higher salaries than they are actually claiming from the charities. Many charities also have to pay volunteers compensation and private fundraisers. In this case, it is very easy for charities to pay out way more than they actually donate as well. Verifying through the 990 form will help you decide whether it is worth donating to that specific charity or not.

How Are Donations Being Asked For?

Consider how donations are being asked before you decide if you should donate. For example, a true non-profit organization or charity should be able to provide you a federal tax ID for IRS and tax deduction purposes. If this isn’t available, it’s possible that this charity could be hoax. Charities will also never ask for personal information such as a bank account number or money wiring. This creates a red flag hazard and should be reported immediately. If you do donate, be sure to use safe payment services so that your accounts are safe and secure.