When you Care Enough to GIVE to the Very Best: Looking Under the Hood of Charitable Organizations

 Last year Americans donated more than $4.7 billion to charity according to The Atlas of Giving. There are plenty of opportunities to give – according to Guidestar there are more than 1.8 million activity charities in the US. I wrote about 10 new perspectives on charitable giving last December. After reading the blog, a client contacted me asking how to learn more about the organizations they are considering for making charitable gifts. Non-profits have come under considerable scrutiny due to questions about where money ends up.

So how do you know more about the charities you support?

Here are three suggestions to increase your comfort level:

1. Review IRS Form 990. Charities are required to report on their activities each year and the IRS Form 990 is available for your review. Guidestar provides an easily searchable database of charitable organizations including their Form 990. You do need a membership login to get full access to information, but this membership is free.

2. Review a charitable rating service. There are many organizations that work to make charities and their activities more transparent. Keep in mind that each service has a different point of view and their input is just one perspective. Here are some websites to get you started:

  • CharityWatch: This website is run by the American Institute of Philanthropy. Features include a search for their ratings on charities as well as lists by area of focus such as child protection, hunger, or veterans and military. Organizations receive grades such as A, B, etc.

  • Charity Navigator: Organizations receive a rating out of 4 stars. Charity Navigator currently evaluates 5,400 charities.

  • Guidestar: Guidestar also includes personal reviews on a 5-star rating system from people who have been involved with or given to organizations.

3. Get involved! If you want to get the biggest bang for your buck, think about rolling up your sleeves and volunteering at a charity. There can be an intrinsic reward that is magnified when both your money and time are being devoted to a good cause. This is also an exceptional way to understand the way an organization functions and make a stamp on causes that matter to you.

What’s worked best for you when working to fund charities? Let me know if you have any suggestions to add to the list.

Melissa Joy, CFP®is Partner and Director of Investments at Center for Financial Planning, Inc. In 2011 and 2012, Melissa was honored by Financial Advisor magazine in the inaugural Research All Star List. In addition to her frequent contributions to Money Centered blogs, she writes frequent investment updates at The Center and is regularly quoted in national media publications including The Chicago Tribune, Investment News, and Morningstar Advisor.

Financial Advisor magazine's inaugural Research All Star List is based on job function of the person evaluated, fund selections and evaluation process used, study of rejected fund examples, and evaluation of challenges faced in the job and actions taken to overcome those challenges. Evaluations are independently conducted by Financial Advisor Magazine.

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